Banks trim Syria operations

Assets drop by 50 percent in past two years

The overall activity of the six local banks operating in Syria retreated over the past two years by some 25 percent when evaluated in Syrian pounds and by 63 percent when evaluated in US dollars, according to the Association of Banks in Lebanon (ABL).

Due to the ongoing confrontations in Syria, the banks' total assets dropped to $3.7 billion at end-2012, after they had fallen to $5.4 billion at end-2011 from $8 billion the year before. Contracting deposits and loans, higher non-performing loans, and large provisions for credit losses resulted in a net income of $16.5 million in 2012, down by 53 percent year-on-year. Net earnings had fallen by 24 percent on an annual basis in 2011. Assets and earnings of banks operating in Syria had been at their peaks in 2010.

Central Bank Governor Riad Salameh reassured that local banks’ Syrian operations no longer represent a risk exposure. “The portfolio of loans Lebanese banks have in the Syrian market went down from $5 billion to just $1.6 billion,” he said.

The six local banks with operations in Syria include five subsidiaries and one associate bank: Bank Audi Syria, Bank of Syria & Overseas (Blom Affiliate), Byblos Bank Syria, Fransabank Syria, Sharq Bank (BLF), and Bank BEMO Saudi Fransi (Associate). Their overall capital stood at $374 million at end-September 2012, some 16 percent of the total capital of the Syrian banking sector. Alain Wanna, Deputy General Manager at Byblos Bank, earlier said that the bank’s management had decided to reduce the size of its Syrian exposure since the outbreak of confrontations there. “Operations in Syria represent just three percent of Byblos’s consolidated operations,” he said.

The six banks have a total of 114 branches in Syria, of which 44 branches in Damascus and its suburbs, 21 in Aleppo, and 11 in Homs.

The total assets of the five subsidiary banks constituted 4.4 percent of the total consolidated assets of their parent banks by end-2011, whereas their net income contribution stood at two percent. As per the ABL’s preliminary data, the contribution of banks' Syrian subsidiaries to assets and income fell to less than three percent and one percent, respectively, at end-2012.