02 November 2010
BEIRUT: Central Bank Governor Riad Salameh urged Lebanese banks Monday to expand into Turkey and Syria through mergers and acquisitions as part of a drive to create a banking bloc that encompasses all these countries.
He added that Lebanese banks should seriously consider further expansion in these two countries and opt for mergers with other banks in Syria and Turkey.
“The Central Bank looks to establish banking relations that are advanced and deep with Syria and Turkey,” said Salameh at a conference titled “Towards a MENA Banking Schengen: Turkey, Syria and Lebanon” at the Movenpick hotel.
“We’ve encouraged our banks to establish or to acquire banks in these countries.”
Salameh added that cooperation agreements being forged between central banks in the countries would lay the groundwork for a more vibrant cross-border banking sector.
The three countries are set to sign a series of agreements that would facilitate information exchange between the central banks in the three nations in addition to easing regulation on financial flows.
According to Salameh, electronic bank transfers to Turkey have spiked from 2004 to 2009 by roughly 96 percent. They totaled $5.7 million, roughly 1.5 percent of total transfers out of Lebanon. Turkish electronic transfers into Lebanese banks neared $1 million, which represents 5.11 percent of transfers into Lebanon.
Electronic transfers to Syria jumped from $1 million in 2004 to $18 million in 2009, representing 4 percent of outgoing electronic transfers.
Currently, seven Lebanese banks operate in the two countries, with six in Syria and one in Turkey.
Salameh touted the initiative as key to the expansion of trade and investment.
Central bank governors of Turkey, Dormuz Yilmaz, and of Syria, Adeeb Miyala, who were also present at the conference, laid out of some of the agreements’ tenets.
“First is cooperation, and strengthening the financial ties in this region, and particularly those that relate to payment systems and the ability to build an organizational system for banks,” said Yilmaz.
Yilmaz said that trade relations between the three countries has seen rapid growth since the signing of the Adana agreement in 1998, and the free-exchange agreement of 2004. The recent abolition of visa requirements boosted trade by nearly 120 percent this year, according to Yilmaz.
Governor Miyala praised prudent banking practices in the region for curbing the repercussions of the international credit crisis, and said that the aftermath of the crisis represents “an opportunity available to us today and the doors are open wide for us to extend the bridges of cooperation and strengthen our bonds and exchange relationships.”
Miyala said that there were more than 20 active banks in Syria, 11 traditional private banks and three Islamic. The banks extend into a network of 481 different branches that cover the expanse of the country. He said the banks had $28.63 billion in deposits, representing 16 percent growth this year.
In January of this year Lebanese banks operating in Syria received approval from the Syrian government to increase the maximum foreign ownership in their local affiliates to 60 percent from the current 49 percent.
The six Lebanese lenders with affiliates in Syria are BLOM Bank, Bank Audi, Byblos Bank, Fransabank, Banque Libano-Française and Banque Bemo, the paper reports, citing Lebanese banking sources in Syria. Most of the banks have asked to increase their stakes.
Copyright The Daily Star 2010.
