Special banks were established in Syria under Law No. 29 issued in 2001, which allowed for the first time in the country’s history the establishment of private banking institutions. As a result, the first private bank, “Saudi Pimo Bank,” was established in 2003 to be followed by a series of private commercial banks, including: Bank Audi, Bank of Syria and the Gulf, Bablos Bank, Bank of Syria and Diaspora, the International Bank for Trade and Finance, Qatar National Bank, Arab Bank-Syria, and Bank of Syria-Jordan.
The country also witnessed the establishment of a number of Islamic banks such as: Al -Sham Bank, Al Baraka Bank, and the Islamic International Bank of Syria.
According to a report published on the Al -Jazeera Net website, the Syrian banking sector has been suffering from structural imbalances since the Assad family received the rule in 1970 until 2024, despite the limited update attempts that affected its structure. This sector remained in its entirety locked up to the role of a decree and directed within the political economic system.
The report indicates that private banks were able to enjoy more independence and flexibility compared to their governmental counterparts, and later contributed to GDP, driven by a noticeable growth in their origins, despite the increasing restrictions and challenges.
The grip of authority over private banks
The researcher and expert in the Syrian economy, Younis Al -Karim, explained that most of the founders of private banks in Syria belong to businessmen, and Al -Karim added – in an interview with Al -Jazeera Net – that these businessmen gathered later under the umbrella of two main companies:
- “Sham Holding”: The ownership of Rami Makhlouf, the uncle of the ousted president, Bashar al -Assad.
- Syria Holding: It was established by a group of those close to the regime, they are not subjected directly to the domination of Makhlouf.
Al -Karim adds that these banks played a major role in collecting the money of depositors, which were later allocated to huge loans to members of their boards of directors and those close to them, as well as financing a number of businessmen associated with the system.
He pointed out that one of the most prominent roles of private banks was to collect foreign exchange, especially the US dollar, from local markets, in light of the prevention of government banks (except for the Syrian Commercial Bank) from dealing with it. This gave businessmen loyal to the regime, which enabled them to control the local economic scene and implement investments outside the country.
Al -Karim believes that this political use of private banks is weaker than its ability to perform its primary role, especially in financing small and medium enterprises, which is the goal through which it was decided to enter the Syrian banking market.
He added that some banks that bear the names of Arab or international institutions, such as “Al -Baraka Bank” and “Qatar National Bank”, were licensed through local Syrian companies that used these brands as interface. With the imposition of sanctions on Syria after the revolution, and the withdrawal of foreign partners, these companies remained managing banks locally, without any actual connection with parent banks, and without a significant impact of foreign institutions previously royalty.
A fragile banking sector
For his part, the economic researcher at the Bridge Center for Studies, Khaled Trkawi, confirms that the Syrian private banks are weak in nature, whether in terms of capital or institutional experience, which are newly established and do not have efficiency or independence, which makes them able to finance projects or leading effective economic activity.
The cream attributes the weakness of the entire banking sector to the fragility of the internal market, which has worsened due to inflation and stagnation from the war, and the ongoing changes in the balance of economic forces within the country.
He also pointed out that the deterioration of the value of the Syrian pound imposed on private banks additional operational burdens, especially those related to securing and storing cash money in light of the need for safe spaces and complex logistical structure, which led to a significant increase in costs.
The cream believes that the laws issued by the Central Bank during the previous regime, related to lending ceilings and the prevention of financial transfers, constituted an obstacle to the ability of private banks to exercise their banking role, and thwarted attempts to develop them.
As for Trkawi, it stresses that the absence of transparency and independence in the investment mechanisms followed by private banks is weaker than their growth, and makes them in urgent need of comprehensive structural reform, whether at the technical or technological level.
Reconstruction Challenges … structural banking obstacles
The upcoming role of Syrian banks, whether private or governmental, in the stage of reconstruction, collides with several basic challenges, most notably:
- The continuation of Western and international sanctions on the banking sector, especially those imposed on the central bank, the authority supervising all internal and external banking operations.
- The lack of confidence by foreign companies, which refrained from pumping or depositing their money into Syrian private banks.
- Public confidence declining among local and international investors in the Syrian banking system.
- The absence of Arab openness to the establishment of new banks in Syria due to the narrow financial market and political instability.
- The absence of clear indicators on the value of the Syrian currency, which limits the ability of foreign and Arab banks to assess the risks and invest in this sector.
Turkish experience and a proposed model
According to a report by Al -Jazeera Net, Türkiye offered the Syrian side to benefit from its experience in building a modern digital banking system based on open financial services.
The director of the financial office in the Turkish presidency, Gokal Ashan, said that the adoption of Syria is a similar model for the Turkish regime that would shorten contracts from development to only a few years, which provides time and resources.
Ashan explained that the transition to a digital financial system can achieve a qualitative boom within a period ranging between three and five years, compared to twenty years in the event of traditional methods.
He pointed out that this model is characterized by its low costs and lack of dependence on human resources, which is in line with the current reality of Syria, in light of the bleeding of competencies and the migration of workers in the financial sector.
If the appropriate conditions are available, Türkiye, with its extensive experience, may play a pivotal role in restructuring the Syrian banking system.
Private sector support
Trkawi stresses the need to support private banks and enable them to perform their developmental role. In this context, it is proposed to enhance the capital of these institutions by opening the way for public subscription and offering shares, which increases their ability to finance productive projects.
It also calls on the government to encourage citizens to open bank accounts and deposit their money after providing a safe and reliable technical banking environment. It is considered that creating an encouraging investment environment for local and foreign companies will contribute to stimulating banking activity, and activating the stock market will help expand the horizons of banks’ work.
He concludes that the development of the banking sector in Syria is a basic gateway to developing various public and private institutions, stressing that any future economic renaissance cannot take place without a fundamental reform in the country’s financial structure.
