GCC banks will be vital
Legislation change needed
Gulf banks are expected to help finance private-sector reconstruction projects in Syria but their entry will require changes to foreign ownership rules and extensive reforms to the country’s weakened banking sector, analysts say.
Syrian and Turkish officials met in Istanbul in July to discuss allowing Turkish banks to open branches in Syria, said Majd Hamad, a Tartous-based banking expert at Karam Shaar Advisory.
These branches would remain fully Turkish-owned, which is not permissible under current regulations. However the People’s Assembly of Syria, the country’s new legislative body, is likely to pass a law enabling foreign banks to operate branches in Syria within the next few months, Hamad said.
Several Gulf banks already own stakes in Syrian lenders, including Qatar National Bank (QNB), Banque Saudi Fransi (BSF), Qatar International Islamic Bank, Commercial Bank of Kuwait and Bahrain’s United Gulf Bank.
Some outcomes do not make for comfortable reading. BSF’s Syrian affiliate made a loss of SAR5 million ($1.3 million) in 2025 on assets worth SAR481 million, according to the parent company
Countrywide, reconstruction will cost about $216 billion, the World Bank said last October, describing this figure as a “conservative” estimate. This includes $75 billion for residential buildings, $59 billion for non-residential structures and $82 billion for infrastructure, and equates to nearly 10 times Syria’s 2024 GDP.
Yet the combined capital of Syria’s privately owned banks amounts to just $800 million, while the six public banks are struggling with high non-performing loan ratios and technological and governance shortcomings, said Hamad.
Nasser Saidi, a former Lebanese economy minister and central bank vice-governor and an AGBI columnist, gave a much higher estimate for reconstruction.
“(This) requires a functioning, well-capitalised banking sector that’s integrated into the international banking and monetary and payment systems,” said Saidi, estimating reconstruction costs at about $500 billion. “The GCC will play a critical role in the reintegration of Syria at all levels.”
QNB, Abu Dhabi Commercial Bank and JP Morgan are part of a syndicate that in July lent $7 billion to the Syrian-born, Qatar-based Al Khayyat family to fund private infrastructure projects in Syria, Bloomberg reported.
Importantly, the loan structure means that lenders are exposed to risk on Qatar, not Syria, said Samir Aita, a Syrian-born professor of political economy at the University of Paris Dauphine.
In January, QNB received a licence to provide Mastercard payment services in Syria. “The Syrian market is … economically promising, given the development and modernisation of the banking sector,” QNB’s chief business officer said in a statement.
An April US government report cited several “top opportunities” for potential investors in Syria’s banking sector.
These include extremely low credit levels, a “severely” underbanked population, a high need for fintech and compliance tools and rising demand for microfinance from small businesses. About 18,000 new companies launched in 2025, the report estimated.
“There are big commercial reasons why Gulf countries would want a sizeable banking presence in Syria,” said Saidi.
“Many non-bank Gulf companies will enter Syria to build and invest in infrastructure, real estate, tourism, transport and these projects will need financing. The return on investment for Gulf banks and companies could be very high and not solely from a long-term perspective, but a three-year timeframe.”
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The US report, however, also highlights substantial risks. These include legislative instability, a difficulty in making cross-border payments, currency and macroeconomic instability, and inflation.
Syria’s banking sector can expand first through providing corporate loans, enabling public borrowing and trade finance, rather than retail banking services, said Saidi.
He said Syrian authorities must decide upon a fixed or floating currency regime, establish and enforce new regulatory and legal frameworks for the banking sector, and audit state- owned and private banks.
However, doing so will be tough, partly as a result of the exodus of much of Syria’s most able professionals.
“You’ve got to rebuild the human capital resources expertise within ministries and the central bank in order to implement all this,” Saidi said.
“For a Gulf bank to establish itself in Syria will require oversight both by its own banking authorities and regulators as well as those in Syria.”