BEIRUT: The newly opened Syrian unit of Al Baraka Bank aims to continue expanding, its chief executive said, despite an eight-month revolt that has mired Syria in violence and economic uncertainty.
The unit of Bahrain-based Al Baraka bank became operational in Syria in early 2011 and will open an eighth branch in Aleppo this month, with plans to open two more branches in December.
“We expect to touch break even this year ... But we are still opening branches despite the situation,” Mohammad Halabi told Reuters on the sidelines of the Union of Arab Bankers conference in Beirut. “Crisis or not, people still need to invest, borrow or save money in their country.”
While new, small private banks appear to have largely escaped the worst, the Syrian economy is struggling under rising international pressure against its army crackdown on protests calling for President Bashar Assad’s ouster, in which the U.N. says some 3,500 have died since March.
Halabi said the impact of the unrest on the private banking sector during the third quarter had caused a 20 percent drop in the sector’s liquidity, while lending had gone down 16 percent.
Syria’s main private banks saw customer withdrawals rise by hundreds of millions of dollars in the third quarter of the year as the uprising against the Assad family’s 40-year rule took its toll on the economy.
Halabi said his fledgling bank was faring well despite the unrest, though its spending to expand across Syria had eaten into profits. “Customer deposits grew by 202 percent to $7 billion at the end of the third quarter, and our total assets hit $9 billion,” he said.
Several new banks have seen similar increases but more established players have not fared as well. Bemo Saudi Fransi for instance has seen deposits fall 31 percent so far this year, while deposits at Bank of Syria and Overseas are down 25 percent since January.
Halabi said the sectors in Syria most heavily impacted by unrest and sanctions were foreign direct investments and tourism, which accounted for over 10 percent of GDP last year. “Tourism and investments from abroad were the sectors most badly hit ... the country potentially lost $3 billion in revenues from these two sectors,” he said.
The U.S. and EU have imposed sanctions on dozens of senior Syrian officials, as well as state businesses including the country’s biggest lender, Commercial Bank of Syria.