The Governor of the Central Bank of Syria, Abdul Qader Hasriyeh, announced on Monday, October 6, that the bank has prepared a draft of the executive regulations for Investment Banking Law No. 56 of 2010, without clarifying whether this is the first such regulation or a revision of earlier ones.

In a statement published on Facebook, Hasriyeh described the preparation of the regulations as a “qualitative step contributing to the development of Syria’s financial and banking system, meeting the financing needs of reconstruction, and enhancing the investment environment in line with regional and international transformations in financial services.”

Law No. 56 defines an “investment bank” as a financial institution that aims to finance private-sector investment activities, participate in funding public-sector economic projects, provide advisory services, and contribute to establishing companies, in accordance with the provisions of the law.

Law Objectives

According to Hasriyeh, the law and its executive regulations aim to:

•  Regulate the work of investment banks in line with best international standards and practices.
• Enable the financial sector to play an active role in funding development and reconstruction projects.
• Strike a balance between encouraging private investment and ensuring public oversight and institutional transparency.
• Strengthen investor protection and promote sound governance and corporate responsibility.

He added that licensing investment banks in Syria, once the executive regulations of Law No. 56 are issued, would represent “a strategic step toward building a modern Syrian economy based on investment, transparency, and accountability.” He did not, however, mention whether any investors or businessmen had submitted applications for investment bank licenses.

Arab and Foreign Banks Interested

In August, the Central Bank denied reports that new banks had been established, confirming via its Telegram channel that no licenses had been granted for any new banks in Syria.

“It has come to our attention that some outlets are circulating news about the establishment of new private banks,” the bank said. “We clarify that no new bank licenses have been issued in Syria.”

However, it acknowledged that “several Arab and foreign banks have expressed interest in entering the Syrian banking market to benefit from the investment opportunities linked to reconstruction and new projects.”

The bank added at the time that it welcomes applications to establish private banks and conducts the necessary studies for licensing new institutions in accordance with Law No. 28 of 2001 and its amendments, as well as international standards and the needs of the Syrian economy. Any licensing, it said, is subject to formal registration procedures and public announcement in the Central Bank’s register of banks.

Under Law No. 28 of 2001, “banks may be established as private Syrian joint-stock companies or as joint Syrian shareholding companies, in which the public banking sector, the Syrian General Insurance Corporation, and other savings institutions may hold up to 25% of the capital by decision of the Council of Ministers.” Such banks operate under the supervision of the Central Bank of Syria.

Activities of Investment Banks

According to Law No. 56 of 2010, investment banks in Syria may exclusively engage in the following activities:

• Provide financial, administrative, legal, and economic consulting services to public and private entities, excluding investment advisory in securities unless conducted in accordance with paragraph 14 of the same article.
• Offer advisory services related to mergers, acquisitions, and corporate restructuring.
• Provide consulting services for the development of banking services.
• Finance investment projects in both the public and private economic sectors, including Build-Operate-Transfer (BOT) projects, through various forms of financing and for different durations, in local or foreign currencies. Banks may also cooperate with other financial institutions to achieve this purpose.
• Engage in securitization operations with prior approval from the Central Bank’s board, in line with specific regulations issued for this purpose.
• Lease safe deposit boxes for storing cash, documents, and valuables.
• Buy and sell shares and bonds of joint-stock companies, as well as other securities authorized for trading in Syria, within limits and ratios set by the Central Bank.
• Participate in the establishment, management, and ownership of companies, provided such ownership does not exceed 15% of the bank’s capital.
• Establish and own investment funds, not exceeding 15% of the bank’s capital.
• Invest part of their funds as deposits in other banks.
• Issue medium- and long-term certificates of deposit.
• Provide medium- and long-term guarantees against sufficient collateral, in local or foreign currencies.
• Open investment accounts for pension funds, professional syndicates, and associations.
• Engage in financial services and brokerage activities through a subsidiary company, in accordance with licensing regulations of the Syrian Commission on Financial Markets and Securities.
• Conduct any other activities defined by the Central Bank’s board as permissible for investment banks, without contradicting the above provisions.