Syria is offering foreign investors a majority stake in its private banks as the country pushes ahead with efforts to boost economic reforms and move away from its socialist legacy.

The move also comes as Syria steadily sheds its image as a radical in the political
arena, with ties warming up with former foes such as the US, France and Saudi Arabia, according to a report in our sister newspaper Gulf Daily News.

Central bank governor Adib Mayala said that under a January 4 banking law the maximum capital stake for foreign investors was being raised to 60 per cent from the current 49 per cent.

'It is an important measure which will boost the capacity of Syrian banks,' Mayala said.

Private banks were authorised in Syria under a law passed in 2001, but with Syrian nationals holding the majority stakes.

Over the past six years more than 10 private banks have been opened, including Banque Bemo Saudi Fransi SA which launched operations in January 2004 becoming the first private bank to operate in Syria.

Other private banks that have opened shop in Syria include the Jordan-based Arab Bank and Lebanese establishments such as Byblos Bank and Audi-Liban.

The January 4 law also allows private banks to raise their capital to $200 million, from a previous cap of $30 million, while the limit for private Islamic banks is being
tripled to $300 million.

According to Mayala, this will inject some $2.2 billion into the private banking sector in Syria.

The legislation encourages European banks to enter the Syrian market, whereas holding a minority stake had 'represented an obstacle' for foreign investors, Mayala said.

He said five more private banks have applied to open branches in Syria and are
awaiting a green light.

Such measures have been adopted 'in order to back up economic reforms in Syria as well as the development process,' Mayala said.

The central bank has also eased restrictions on foreign monetary transactions for Syrian citizens who can now transfer 'up to $10,000 in foreign currency each month,' Mayala said.

The new regulation went into effect less than a month ago, he said.

'Current accounts have also been totally freed up for businessmen who previously had to deposit all foreign currency in a special account held by the state-run Commercial Bank of Syria,' Mayala said.

Syrian economist Samir Seifan said the drive to bolster economic reforms had
attracted a small increase in the number of foreign and local investment in the country, but this was not enough.

Damascus needs at least $12 billion in investments each year to guarantee seven per cent growth and tackle poverty and unemployment, officially estimated at 10 per cent and twice as high by Western experts, Seifan said.

The easing of restrictions has led to greater involvement by private banks in major development projects in Syria, according to Mayala.

In 2008, French cement giant Lafarge signed contracts to build two cement plants, with 11 private Syrian banks investing $155 million in a project that has the backing of the European Investment Bank, he said.