Middle East: Lebanese banks step back from Syria


Olivier Holmey
Published on:

Several banks write off Syrian operations; they continue to be big shareholders.

The Syrian central bank prevents Lebanese banks from closing operations
in the country

Lebanese banker Georges Sayegh has long been associated with Blom Bank, the Beirut-headquartered financial institution. In 2004, when Blom set up Bank of Syria and Overseas (BSO), its Syrian operation, he was its first general manager. To this day he remains Blom’s representative on the board of BSO, as well as an adviser to the general management of Blom.

But that is about to change. During a recent meeting in Beirut, he told Euromoney that, at the next general meeting of the board of BSO in Damascus, he would step down from the board. He will then seek re-election as an individual rather than as a representative of Blom.

“My seat will no longer say Blom Bank, it will say Georges Sayegh,” he explains. He smiles and with his fingers mimics a pair of scissors cutting through what links the two banks. 

His decision is symptomatic of a wider trend. Lebanon’s big banks, which have had a large presence in Syria ever since that country’s banking privatization drive in the early 2000s, are beginning to distance themselves from it. 

When the Syrian civil war began in 2011, Lebanon’s banks did not immediately choose to leave the market, hoping the conflict would be short-lived. With large stakes in six of Syria’s 14 private banks, Lebanon’s financial institutions were a big force in Syrian banking and generally wished to retain that status.

But as the war continued, the Syrian economy contracted and the risks associated with remaining active in the country multiplied. As a result, some Lebanese banks have decided to take a step back from Syria.


Bank Audi was among the first to act, deconsolidating and writing off its investments in Syria in September 2016. Blom followed three months later. Byblos announced in late January that it had done the same over the course of last year. Sayegh says Banque Libano-Française (BLF), a shareholder in Syrian bank Al-Sharq, has also deconsolidated. 

Asked why Lebanese banks are retreating, most bankers evade the question. But Sayegh is unequivocal: “To be honest, it’s about American sanctions.” Because Syrian banking is heavily sanctioned by the US and any breach of those sanctions would be heavily punished by US prosecutors, some Lebanese banks are wary of remaining active there. 

More generally, being active in a war-torn country such as Syria could hurt the banks’ reputations.

Bankers say the activities of Syria’s Lebanese-backed banks are minimal anyway. The sharp rise in deposits and lending up to 2011 has given way to a dramatic war-time fall in banking activity. Deconsolidation and the removal of Lebanese staff from Syrian board and management positions send a clear message that Lebanon’s banking sector should not be held responsible for what is happening in Syria.

Not all Lebanese banks present in the country have reached the same conclusion, however. Banque Bemo, for example, has remained committed to Banque Bemo Saudi Fransi (BBSF), its operation in Syria. Bemo retains its seat on the board of the Syrian bank and has no intention of leaving it, according to a source at BBSF. Fransabank, a large shareholder in Fransabank Syria, has as yet not announced that it will deconsolidate from Syria.

The Lebanese banks are not being forced to distance themselves from Syria. Riad Salamé, governor of Lebanon’s central bank, tells Euromoney that he neither encourages nor discourages Lebanon’s banks from working in Syria. Salamé says he is confident that those Lebanese banks that do decide to remain active there comply with all Lebanese regulation. 

Abdul Hafiz Mansour, head of Lebanon’s Special Investigation Commission, the country’s anti-money laundering unit, was similarly confident about Lebanese banking activities in Syria when he was asked about them in February. 

“I’m not worried at all, because Lebanese banks are more than careful,” Mansour told Euromoney.

Not a complete retreat

Deconsolidation and removal of key staff does not mean a complete retreat from Syrian banking, however, as those Lebanese banks that have applied these measures still retain large shareholdings in the country. 

Opinions differ as to whether or not Lebanon’s banks wish to remain shareholders in Syrian financial institutions. Salamé suggests the reason no Lebanese bank is selling its stock in Syria is the absence of buyers. Several Lebanese and Syrian bankers echo that viewpoint. 

Salamé adds that the Syrian central bank does not allow Lebanese banks to close down, or even change the names of, their Syrian operations. 

Others say Lebanese banks are deliberately keeping their shares to retain a foothold in the country. Once the war ends, the thinking goes, they would be able to quickly move back in and fund Syria’s reconstruction.

Lebanese banks are not the only ones to have taken a step back from Syria. Saudi Fransi, the Saudi bank, left the board of Banque Bemo Saudi Fransi as early as 2011 . Since then, Saudi Fransi has been kept regularly informed of BBSF’s activities. BBSF’s senior management travels twice a year to Riyadh to keep Saudi Fransi informed, according to the BBSF source. A source at Banque Bemo said he was unaware of any professional trips made by BBSF management to Saudi Arabia in the past three years.