Sudanese Banks: Violent Shocks and Attempts to Absorb Them

With the initial outbreak of war, scenes of chaos emerged: violent looting of banks and their ATMs, with branches spread across the streets and markets of the Sudanese capital, Khartoum. Vaults were dismantled, furniture and all assets were stolen, and fires were set in many of them. These scenes were shocking and terrifying to the Sudanese people, still reeling from the shock of the war’s sudden outbreak, just on the eve of Eid al-Fitr that year. Many had not yet withdrawn significant amounts of their savings to prepare for the religious occasion. Overnight, the branches turned into empty ruins with smoke rising from their debris.

Immediately after the war began, all 39 government and commercial banks in Sudan went out of service. Over 70% of operational branches in the country were shut down, and their assets, estimated at around 45 trillion pounds, were cut in half. The national currency lost over 50% of its value with the initial waves of fighting. This sparked warnings of a severe collapse of the banking sector and doubts from banking experts about the ability to recover loans granted to customers, as most investors had lost their businesses and industrial activities.

In an attempt to absorb the shock and avoid a total collapse, banks took harsh measures at the expense of their staff and operational capacities, sacrificing large numbers of employees, placing some on indefinite unpaid leave. These harsh measures affected over 45% of the staff, raising serious concerns about the future of the banking sector in Sudan. The management of the Bank of Khartoum placed 1,215 employees on unpaid leave, representing about 45% of the workforce, while Faisal Islamic Bank carried out widespread layoffs affecting over 1,100 employees. According to information obtained by “Atr” from dismissed employees who sought justice through labor courts in Port Sudan, they have not yet been granted redress.

Despite the banks’ measures, there was little success in avoiding collapse. According to banking and economic experts who spoke to “Atr,” the banking sector indeed hit rock bottom. The Sudanese pound experienced a sharp decline against other currencies, creditors refrained from repaying debts, exports ground to a halt, illegal import channels proliferated, and banks lost deposits. Furthermore, trust between banks and customers dissipated, leading to capital flight.

The Central Bank of Sudan, which also did not escape looting and fires, confirmed in a statement on its official website that banks had been subjected to widespread looting and destruction since the beginning of the war. The bank pledged to work on minimizing the damage to the banking sector and addressing the depreciation of the national currency. In press statements, the Central Bank Governor, Burai Al-Siddiq, claimed that banks managed to recover their systems and historical data in record time, and that strategic portfolios resumed operations to provide liquidity and import petroleum products. He denied that Sudanese banks had collapsed as a result of attacks on several branches due to the war, hinting at plans to change the currency, though he acknowledged the complexity of the process. He reassured depositors that they had not lost their savings and that the situation was under control.

However, the fighting continued for more than a year, expanding southward and westward, engulfing vast and volatile territories, including the entire central region, Darfur, and Kordofan. Dozens of bank branches went out of service, were fully looted, and the pound’s value continued to plummet.

This was not the first time that Sudanese banks faced violent shocks. Since banking activities entered the Sudanese market with the establishment of the “Anglo-Egyptian Bank” in 1913 and “Barclays Bank DCO” in 1916, the banking sector has been hit by political and economic disasters that have disrupted the stability and professionalism of the banking community. The first major disaster occurred between 1970 and 1975 during the nationalization and confiscation process, followed by erratic policies and mergers. Former banker Tariq Suleiman described the situation as a “disaster” exacerbated by a “brain drain” in the banking sector, with the migration of professional talents and the loss of banking traditions, discipline, and the professional integrity that Sudanese bankers were once known for.

In 1992, three years after the Islamic Front’s coup, the Central Bank of Sudan established the “Supreme Authority for Sharia Supervision” to implement the policy of “Islamizing the banking system” and ensure that banking operations were free from “usurious elements.” This policy coincided with the state selling its assets in the public sector, retaining only four government banks, including specialized banks and one commercial bank, out of 39.