Banking Sector Reform in Libya had been started by merging two of the country’s important bank, namely, Al Joumhouriya (Republic) Bank, and Al Oumma (Nation) Bank.
Al Oumma (Nation) Bank was Libya’s biggest state bank with respect to asset and the Al Joumhouriya (Republic) Bank was the fifth largest state bank. By merging these two banks the government formed a combined asset worth 65 billion dollars. This helped the government to develop and modernize the banking sector through which it could improve the banking services.
The new bank had an employee strength of 5,800 people with 143 branches over the country.
Collaboration with BNP Paribas:The government made an effort to tighten the state enterprises for providing benefits from the economic growth to all the citizens and state organizations. In the mid of 2007, the Libyan government announced the BNP Paribas as its strategic partner and initiated the privatization program.
The BNP offered a huge amount of money, precisely 197 million dollar, for a 19% stake. BNP got the power to control the management and, also, it could raise its stake within three to five years.
The Libyan economy was suffering from complex tax systems and limited foreign investments. So the government established some private banks. However, three state owned banks had been recapitalized by the Central Bank of Libya in 2005. The government introduced a new law for banking through which the Central Bank was able to control all the commercial banks over the country.
Impact of Reform:
Through the banking sector reform the Libyan government was able to restructure their financial sector that was hugely dependent on the banks. Therefore, the economic growth of the country got the right pace.
Last Updated on : 26th June 2013