Former Finance Official: 72% of Bank Branches Out of Service

Dr. Abdulmonim Mohamed Al-Tayeb, a former Undersecretary of the Ministry of Finance and National Economy and banking expert, revealed that 72% of bank branches have gone out of service due to war-related attacks. He noted that 46% of branches still face challenges resuming activities over a year and a half since the conflict began.

Dr. Abdulmonim stated in a paper presented during the First Economic Conference on War Challenges that the banking sector is one of the hardest-hit sectors by the war. He highlighted the adverse effects on banking performance, including reduced collections from loan installments and the inability to meet scheduled transactions mandated by the Central Bank. This has led to increased default rates, limited the flow of new financing to clients, and undermined the institutions tasked with ensuring smooth operations.

The paper further outlined significant consequences, such as reduced revenue, increased expenses, and sustained losses by banks supporting their operations through 2023 and mid-2024.

Recommendations:

1. Central Bank Initiatives: Expand efforts to ensure the sustainability of banking services, support banks facing collapse through financial and technical assistance, and review licenses for banks operating in a single state.

2. Strategic Financing: Encourage funding for strategic goods and infrastructure while establishing specialized banking portfolios with other banks. Explore opportunities for grants, loans, and the potential issuance of new currency with a well-defined methodology.

3. Bank Collaboration: Foster cooperation between banks to prevent systemic collapse, implement internal reforms to mitigate war impacts, and increase capital to improve banking safety standards.

4. Banking Union Activation: Strengthen the role of the banking union to facilitate unified action and promote resilience across the sector.