Threat to private banks: Bank of Algeria may launch heavy sanctions

Is the national banking scene on the way to witnessing a deep upheaval in so far as certain private banks might be overrun by the course of events and find themselves in breach of the Algerian law?

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• Besides the public banking community including El Baraka and the Lebanese private bank Fransabank el Djazair which complies with the capital increase regulatory obligation, all the other private banks (about fifteen) have not fulfilled their capital increase file up to date.
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• With less than three months left for the deadline set by the Council on Money and Credit (CMC), it is difficult not to say impossible for those banks to respect the fixed date on December 23 as it is set by the monetary authority, according to Echorouk’s sources.
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• Last year, the CMC held a meeting on December 23rd and set a 12-month-deadline for banks to comply with the obligation of increasing their capitals to 10 billion DZ minimum. Public banks are not involved in this because their capitals largely exceed this threshold.
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• According to the same sources, the question to be asked is what will happen to those private banks which have not met this requirement up to date.
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• “All the more so that they do not have enough time to prepare the application-related file as the capital increase procedure is submitted to strict regulatory measures which take a long time,” the same sources added.
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•  The CMC serving as the authority in this regard is expected to respect a whole mechanism from keeping watch on the application and the source of funds to making sure that the application is regular.
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• That presumes a rigorous and meticulous treatment imperatively requiring prior checks before the licence requests are delivered.
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• Those procedures can not be conducted in short time especially with the other obligatory measures such as dealing with notary, financial flow with the treasury and certificates registration. All in all, everything converges to say such feasibility is impossible within less than three months. On the other hand, private banks in Algeria do not have those three months and must get over with their capital increase before the deadline expires on December 23.
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• Sources at the Bank of Algeria say expect Fransabank el Djazair which obtained the capital increase licence, any other bank has submitted an application in this regard up to date.
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• That means the dilemma of the national banking sector which had a year to prepare for this deadline though. Questions are asked to try to understand how comes that international banks are late to show their respect for rules set by the national monetary authorities? What will happen if those banks can not meet those requirements? Will the scenario of launching heavy sanctions or banning the banks at the very worst for not increasing their capitals on that deadline become real?
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• “It’s total vagueness,” said officials at the Bank of Algeria.