Modernizing the banking system

Mr. Kosty Shahlawi

Banks play a crucial role in financing the economic growth no matter what the economic system is. Because of that, everybody is aware of the fact that modernizing the Syrian banking system is not only a necessity but also a precondition for all reforms in other sectors.

The modernizing process, which should always be updated benefiting from the experience of other countries, could be related to many reasons. One of these reasons is the private banks expected to be established soon in Syria.

In order to face the competition challenges, many reforms have to be done in the structure of the Commercial Bank of Syria (CBS) which will be affected more than the new banks. Though CBS has already had advantages helping it to compete (large-scale activities, the state control, the numerous branches all over the country), its deposits may face certain risks due to the competition expected to be rise with the new banks. This restructuring process needs the following procedures:

- To stop the random employment policy and reconsider the number of employees giving more chance to competent cadres (bonuses, internal and external training courses etc.);otherwise, those cadres will run out to join the new banks leaving in the CBS, employees with no development potential;

- Improve banking services by introducing modern technologies and adopting an integrative information system;

- Solve the problem of clearing system currently effective among the CBS branches relating it by a modern communication network. The importance of such network will increase with the advent of new banks because the CBS is expected to play a coordinating role in the clearing operations with them;

- Establish a high institute for banking studies with local and, if necessary, foreign lecturers and continuously updated curricula.

The steps mentioned above could be applied in other specialized banks in Syria, more easily and with less time than in the CBS.

Investing in banking needs special care especially in terms of what is better: merger or separation between investment banks and commercial ones. From the government point of view, merging both kinds of banking activities will improve the performance and facilitate the control. A special care should be given, here, to the issue of establishing a stock market.

Finally, the lecture affirms in order that the current efforts might give fruits, new financial regulation must be considered and everyone must take part especially the government that is assuming the most important role.