Syria's Banking Sector Restructures Amid Lebanon's Financial Collapse

In a decisive move, Syria's central bank has mandated commercial lenders to fully provision for their losses linked to the financial turmoil in Lebanon. This directive, issued on September 22, asks banks to recognize 100% of their exposure to Lebanon's financial system, with a six-month deadline to present credible restructuring plans.

Syrian lenders, heavily impacted by Lebanon's financial collapse, must now navigate a path to recovery. They are exploring new investments and possible foreign acquisitions to mitigate risks. Central Bank Governor Abdelkader Husriyeh emphasized the importance of a credible restructuring strategy, stating the clock has started.

The financial exposure amounts to over $1.6 billion— a substantial part of the Syrian banking system's deposits. As some bankers criticize the tight timeline, the move marks a critical step in Syria's broader plan to rebuild its war-torn and sanctioned economy. Talks with foreign financial entities to secure new partnerships are ongoing.