Algeria will recapitalize state-owned banks in 2017

Oct 14, 2016

An amount of 42 billion dinars was allocated to this end.

In 2017, the Algerian government will recapitalize public banks, which currently face a liquidity crisis.

In the final version of the 2017 budget law, seen by news website TSA, an amount of 42 billion dinars (€345 million) has been allocated for the recapitalization of eight state-owned banks.

"The liquidity was sucked out of public banks by the Treasury, via the national bond," economist, Ferhat Ait Ali told TSA.

"Each bank may ask the Bank of Algeria to raise the equivalent of eight times its capital," he added.

Last month, the Algerian government said that public banks could soon list on the local stock exchange, with a view to
contributing to developing the country's financial market and to diversifying banks' sources of funding.

The plan would open the door for foreign investors to acquire controlling stakes in banks, reversing a rule requiring Algerian firms to keep a majority shareholding in any partnership with foreigners.

The country's financial system has been affected by the dramatic fall in oil prices (down 44 per cent between June and December 2015), which had immediate effects on the economy.ADNFCR-2976-ID-801826744-ADNFCR