Libyan banks in urgent need of modernisation
Italian bank UniCredit won preliminary approval on 9 August to open a subsidiary in Libya. The Central Bank was expected to award two other licenses.
Five international banks lost out, including three Gulf institutions – the UAE’s Emirates NBD and Mashreq, as well as Qatar Islamic Bank (QIB) – which had all been shortlisted for a licence.
The decision by the Central Bank to award only one out of three planned licenses highlights Libya’s slow progress in opening up its banking sector to foreign institutions.
“The Central Bank has not given any explanation, but it’s disappointing,” says Tarek Alwan who runs SOC Libya, a London-based company founded primarily to help and support international companies entering the Libyan market.
According to Alwan, QIB was hoping to secure a licence in order to open a branch with a paid-up capital of $600m.
“They signed an agreement a few months ago with HR House, a Libyan recruitment agency, to help them hire 500 Libyans within the next two years, but I think these plans are now on hold.”
QIB, which currently has a representative office in Libya, declined to comment on any new operations in Libya.
Unlike Emirates NBD and Mashreq, QIB currently has a representative office in Libya.
“Libya’s banking infrastructure is very outdated and in desperate need of modernisation,” says Alwan. “There is no internet or telephone banking and it’s not possible for customers to even get basic products such as mortgages.”
Alwan says the Central Bank has been talking about introducing online services for all banks for more than five years.
“Progress has been very slow,” he adds. “If they want to attract more foreign investment and expand and improve their infrastructure then they urgently need to liberalise the banking sector.”