Foreign investors could be the Syrian banking sector’s best chance at a quick revival. Even relatively small cash injections could revive the country’s dormant banking, Sima Partners Managing Partner Hani Al Jundi tells EnterpriseAM. “USD 10 mn in deposits can activate the Shahba Bank,” he says, where Qatar’s Estithmar Holding acquired a 49% stake late last month. “Imagine the same multiplier effect if Qatari banks, Emirati banks, or even small Bahraini banks [make similar moves]. USD 20-30 mn would reactivate the entire banking system here in Syria.”

You can’t exactly rebuild a country with suitcases of cash. While the Central Bank of Syria being reconnected to SWIFT and opening its first US Federal Reserve account since 2011 are major milestones, the country’s ailing banking system remains a binding constraint on large-scale investment.

IN CONTEXT- War and financial isolation have squeezed Syrian banks dry. A 2025 Blominvest Bank report puts total banking assets (the loans, deposits, and investments they hold) at roughly USD 4-5 bn. That figure may include some USD 1.6 bn in deposits in Lebanese banks and, well, only God knows their fate. Total shareholder equity in the system is even more alarming, standing at just USD 795 mn as of 4Q 2025, according to Karam Shaar Advisory estimates. Meanwhile, about 40% of public-facing bank branches are non-operational.

To put that in perspective, the entire Syrian banking sector’s capital base now is roughly the equivalent of that of a single mid-sized bank in Jordan, Egypt, or Tunisia. If the whole sector were treated as a single bank, it would fall in the lowest quartile among the largest 100 Arab banks.

But the system is starting to come back online: The Central Bank of Syria (CBS) has reconnected to SWIFT, reopened an account at the Federal Reserve Bank of New York, and is working to establish correspondent banking relationships with countries including Turkey, Germany, and Canada. Governor Abdulkader Husrieh has also been lobbying European capitals, including Paris and Vienna, to re-engage with Syria’s banking system. Support signals have also been trickling in from Western economies, even if serious capital has yet to follow: The EU is working on resuming full trade ties, while Norway, home to the world’s largest sovereign wealth fund, recently lifted a ban on investment in Syrian bonds.

The latest case in point: QNB has become the first foreign bank to allow international card acceptance in Syria — that means Syrian merchants can process Visa and Mastercard transactions for the first time in over a decade. The move follows a landmark announcement by the Central Bank of Syria to re-integrate with Visa and Mastercard global payment networks, effectively dismantling a major barrier to foreign exchange and international tourism — and possibly creating conditions for fintech players in the country.

That progress is opening a lucrative window for foreign investors. “If you acquire a Syrian bank today, you’re acquiring it for cents on the dollar,” Al Jundi says. This is why some early movers are moving quickly despite the risks — they’re betting that the low entry cost of a Syrian bank outweighs the massive due diligence risks of sanctioned shareholders and wartime liabilities.

And those liabilities run deep: Many board members and shareholders of active banks were sanctioned individuals, Al Jundi tells us. “Are those banks implicated in what happened in Jobar or Idlib? Did they finance these things? Did they disperse any salaries for the Assad regime?” These are the types of questions that will bedevil due diligence processes by would-be acquirers anxious to avoid falling into a legal and PR nightmare. “Whoever is going to acquire might be questioned 10 or 12 years from now. It’s a very sweet deal for any outside bank, but a very strong due diligence [process] needs to take place,” Al Jundi adds.

ICYMI- In addition to acquisition of a 49% stake in Shahba Bank from Syria-based Bemo Saudi Fransi Bank and Ahli Trust Bank, Estithmar Holding is also believed to be in advanced talks to acquire a 30% stake in the Syrian International Islamic Bank.

Regional competition

Who’s looking to buy into the sector is being driven by politics more than economics. “Regional geopolitics are pretty much shaping the order of re-entry,” Benjamin Fève, senior researcher at Karam Shaar Advisory, tells us. “Turkey looks like the fastest mover because it combines political backing, trade exposure, proximity, and direct commercial interest in reopening payment corridors with Syria,” he adds. Turkish players — like state-owned Ziraat Bank and private lender Aktifbank — are reportedly in advanced talks with the regulator there to open shop as early as this year.

But Al Jundi thinks the Saudis could beat the Turks to the banking sector. His logic is simple: Acquiring or backing a local bank could provide a direct financial channel to back the USD 6.5 bn in Saudi Arabia pledges for reconstruction investments, he tells us. “At the end of the day Turkey’s interest in Syria is going to be a private sector interest… I don’t think the government is going to intervene much. They already have their own crisis,” Al Jundi adds.

Outside of those state-aligned bids, private players are mostly a write-off for now — except a very few that are backed by governments with political stakes in the country, Fève tells us. “Private banks still need guarantees, as Syria’s banking system remains too degraded to attract market-driven investment at this stage of the transition,” Fève notes. “[Their entry] will take a lot of time because they would usually wait until they are able to point to a precedent, to functioning correspondent channels, and a tolerable compliance narrative for their boards and regulators before entering,” he adds.

Remaining hurdles

Even for those willing to jump on the first-mover advantage, the dealmaking environment is complicated. “The most pressing structural bottlenecks lie in compliance, balance sheet weakness, and payment connectivity, more than the lack of investor curiosity,” Fève tells us. He ranks compliance as the single biggest risk for banking investors today, ahead of macro and security concerns: “Though all three actually matter, of course, but I’d say that the risk appetite for shaky compliance is much lower than for, let's say, security issues.”

Compliance starts with the FATF problem. Syria is on the Financial Action Task Force (FATF) gray list and is still designated by the US as a state sponsor of terrorism. While the lifting of Western sanctions technically means it is legal to move cash to and from Syria’s banks, the gray list designation requires a higher level of due diligence from banks dealing with Syria, Al Jundi tells us. Many international banks find the cost of this required due diligence too high to justify, given how limited the volumes of Syria-linked transactions are.

That makes getting off the gray list potentially make-or-break, but the government needs to push harder. “What needs to happen is a technical visit from the FATF global team. They need to do an on-site assessment. And no one in the Syrian government is pushing the FATF organization to do this visit fast enough. They do the visit for one week, and the removal could be out,” Al Jundi explains.

A Qatari-funded Oliver Wyman assessment of financial sector reform is also key to watch. “An externally backed diagnostic of what is broken, what must be fixed, and what sequencing is realistic,” Fève says, calling it essential reading for foreign investors and compliance teams.

The hard part is just starting: With sanctions lifted and SWIFT reconnection serving as proof of concept, the government is now at the most challenging stage of bank reform: “bank-by-bank restructuring, [anti-money laundering] upgrades, reserve management reforms, we need to have statistics [and] supervisory credibility,” Fève tells us.