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MOROCCO |
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Finance & banking system |
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Since the beginning of the Nineties, the Moroccan financial system has carried out several reforms, which focus on three goals: restructuring of capital markets, liberalisation of financial transactions, and reform of banking legal framework. The 1993 banking law abolished direct credit controls, liberalised interest rates, largely eliminated mandatory bank credit allocations, and introduced an interbank foreign exchange market. |
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Finance & banking system |
Since the beginning of the Nineties, the Moroccan financial system has carried out several reforms, which focus on three goals: restructuring of capital markets, liberalisation of financial transactions, and reform of banking legal framework. The 1993 banking law abolished direct credit controls, liberalised interest rates, largely eliminated mandatory bank credit allocations, and introduced an interbank foreign exchange market. These reforms were accompanied by efforts to develop indirect and market based instruments of monetary policy. Liberalisation of the financial sector was undertaken along with strengthening of the financial situation at banks (through restructuring and recapitalisation) and implementation of enhanced prudential regulations and bank supervision in line with international standards, accompanied by privatisation of certain public banks.
Legislation has also introduced the concept of “universal bank”, putting an end to the distinction between commercial banks and specialised financial institutions. In January 2005, the government passed a law granting the Central Bank greater autonomy. In addition, in 2005, Morocco passed a comprehensive financial sector law designed to strengthen banking supervision and improve risk management practices in the banking sector.
The 1993 legislation regulates financial companies: consumer credit and leasing companies. The new law is dominated by three new aspects:
- Unification of the legal framework governing credit institutions, which now include banks and financing companies
- Creation of three institutions: the National Currency and Savings Council (CNME), the Credit Institutions Committee (CEC), and the Credit Institutions Committee (CDEC)
- Protection of depositors by a set of measures (compliance with prudential rules, new conditions for activity) and setting up of a deposit guarantee fund.
A number of monopolies have been eliminated. This is the case for example for operation of the RME (Moroccans resident abroad) structure, the Popular Credit of Morocco (CPM), and the export insurance activities of the Moroccan Bank for Foreign Trade (BMCE BANK), which have now been transferred to an independent company. Over the past two years, the restructuring and rehabilitation of financial institutions have focused on public sector banks: Banque Nationale de Développement Economique, Crédit Agricole du Maroc and Crédit Populaire du Maroc.
An offshore financial market was instituted under law 58-90 of 1992 and circular of September 1992. This law introduced an offshore financial market in the municipality of Tangiers, open to banking and trust company activity. Six licensed institutions were operational as of end December 2005.
Morocco's banking sector is fairly well developed and modern. The banking system is made up of the Central Bank, Bank al-Maghreb, 16 commercial banks (partially owned by or working in partnership with European banks such as BNP Paribas), several development banks, and 36 financing companies. Seven banks control the market and the principal actor is the Banque Populaire’s network, followed by Attijariwafa, the BNPE and banks controlled mainly by foreign shareholders, including the BMCI (a subsidiary of BNP-Paribas) and the Credit du Maroc (a subsidiary of the Crédit Lyonnais-Crédit Agricole Group). The Caisse des Dépôts is extremely active in real estate and tourism, funding public interest projects as well as more modest initiatives.
The Moroccan banking system has developed a range of financing options to help promote investment and new businesses, with lending rates freely negotiated between banks and entrepreneurs. Traditional bank loans cover up to 80 percent of corporate needs, with specific credit lines financing 70 percent of the cost of restructuring programmes for SMEs. With regard to micro-lending and in the framework of the upgrading programme, European credit lines – French, Italian, Spanish and Portuguese – and the Islamic Development Bank have contributed to national financing sources for the development of SMEs. Furthermore, leasing for the acquisition of capital equipment or property for professional use guarantees the rental and financing of up to 100 percent of the cost of acquisition. Capital investment– venture capital, development capital, start-up capital, and restructuring capital – provides SMEs with fresh capital at the various stages of the development cycle. Under certain conditions, seven-year loans can be granted as part of an extension to a new partner or shareholder. The European Investment Bank (EIB), a partner in several funds, encourages the setting-up of such financial instruments in Morocco. There are currently ten venture capital funds. The majority of these funds are of a general nature while others focus on specific activities, in particular new information and telecommunication technologies, such as the Upline Technologies fund. Mobilised funds came to MAD 1.5 billion in 2000.
The Casablanca Stock Exchange (CSE), considered one of the most advanced in the Arab world and using the same electronic trading system as the Euronext (Paris) Stock Exchange, prospered in the 1990s, but from late 1998 through 2002 it suffered from long-lived, severe bear conditions. Market capitalisation passed from MAD 7.7 billion in 1990 (3.6 percent of GDP) to MAD145.1 billion in 1998 (42.2 percent of GDP). Marked rebound in 2003 followed by healthy performance in 2004 and 2005 reflect an upturn in investor confidence. 2005 performance was strong, with MAD 252.33 billion or US$ 29 billion (55 percent of GDP) and 54 listed companies. The capital ratio is on the rise, up 102 percent (14.87 percent vs. 7.36 percent in 2004). The MASI Index rose to 5539.13 points (up 22.49 percent) and the MADEX by 23.8 percent.
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