Islamic banking set for solid growth
The spate of new privately owned banks will soon be joined by specialist Islamic banks, which by all accounts can look forward to a flying start in the pristine Syrian market.
Cover opens up After drawing up legislation to provide the framework for Islamic finance, the Syrian central bank issued the first licences to Islamic ventures in 2006. These, like the conventional banks, must be new Syrian-based entities with at least 51% local ownership.
Three have now either entered or are preparing to enter the market but where the Lebanese were the main suppliers of foreign capital and financial expertise in the new conventional banks, it is Gulf-based players that have taken the lead in developing the Islamic banking sector.
Cham Bank, which opened its first branch in an upmarket area of Damascus this spring, counts Kuwaiti groups among its shareholders, including Investment Dar and Commercial Bank of Kuwait (CBK). The second licensee is Syria International Islamic Bank (SIIB), which is 49%-owned by Qatari investors, and the next arrival will be Al Baraka Bank Syria, an offshoot of the Bahrain-based Al Baraka Group.
If early experience is any indication, the market has more than enough room for these banks, which must adhere to Shariah principles – the most important of which is a prohibition on the payment or receipt of interest.