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ALGERIA |
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Finance & banking system |
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Financial infrastructure is the object of on-going major reforms to modernise the sector. A more stable macro-economic framework and financial balances have helped to effectively implement these reforms. The 1990 law opened the banking environment to national and foreign private capital. Thus, of the 22 banks authorised to do business at the end of 2003, over 12 are foreign. |
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Algeria |
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Algeria |
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Finance & banking |
Financial infrastructure is the object of on-going major reforms to modernise the sector. A more stable macro-economic framework and financial balances have helped to effectively implement these reforms. The 1990 law opened the banking environment to national and foreign private capital. Thus, of the 22 banks authorised to do business at the end of 2003, over 12 are foreign. Several foreign banks, including French, Belgian and Spanish ones, set up representational offices prior to future establishment. In addition to the introduction of universal banks, the law introduced other financial institutions such as investment banks and leasing companies. A draft law on factoring is in preparation.
The financial sector includes 30 public and private banks and government controlled companies. The bank ratio is around 30,000 inhabitants per agency, reflecting weak density and financial intermediation. Public banks dominate the market, holding 94.4 percent of resources and accounting for 42 percent of GDP.
The State foresees the sale of certain public banks to strategic foreign investors. A number of corrective measures have been taken to restructure balance sheets at public banks and clear up their debt portfolio, proceeding with recapitalisation prior to privatisation, especially the Crédit Populaire d’Algérie (CPA) and the Banque de Développement Local (BDL). Operating licences have been withdrawn from Khalifa Bank, the Commercial and Industrial Bank of Algeria (BCIA), and two other private banks.
The government has taken steps to modernise the financial sector by overhauling outdated banking management methods (stricter ratios and capital requirements, deposit guarantee premiums, tighter performance contracts for public banks), improving service and bank audit standards, modernising payment systems, and computerising banking services to improve quality and data transmission and facilitating banking supervision by the Central Bank of Algeria. However, access to loans remains limited. Under-capitalisation at private banks limits loan capacity in light of prudential standards. Although this situation is likely to continue, Algerian authorities are encouraging banks to increase their capital. Specialised private institutions are starting operations on the money market such as Arab Leasing Corporate.
Movement of capital is free for foreign exchange, as is repatriation of profits. The Algerian Dinar (DZ) is convertible for current operations and commercial activities are eligible for foreign currency accounts. |
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