Turkish Banks to Branch into Syria: Signaling a Paradigm Shift in Syria’s Banking Sector

By: Majd Hamad

At the Turkish-Syrian Economic Forum on 9 June 2026, Turkish Trade Minister Ömer Bolat announced an agreement to allow Turkish banks to open branches in Syria, with amendments to Syrian banking legislation currently underway. Syrian Economy Minister Nidal al-Shaar, present at the forum, affirmed Türkiye’s role as a partner in Syria’s economic recovery. If implemented, the agreement would overhaul decades-old regulations governing Syria’s banking sector.

Turkish banking had been present in northern Syria, but not under the authority of Damascus. The Turkish national postal service (PTT), which also operates as a bank, established branches in parts of northern Syria previously outside central state control. In Damascus, the banking sector has long been governed by strict ownership rules. Most notably, foreign entities could own only a 49 percent stake in Syrian banks, with the cap rising to 60 percent under specific conditions, per Banking Law 28 of 2001. For decades, regional banks, mostly from Arab states, could only hold shares as strategic partners in local Syrian banks. This same model was used in April 2026 when Estithmar Holding, a Qatari investment company, acquired a 49 percent stake in Shahba Bank through a subsidiary.

Licensing branches of foreign banks is an entirely new model in Syria. Establishing a branch would mean that a foreign entity could have full ownership of the local branch, a departure from legacy local quota constraints in favor of foreign competition.

The new model offers several advantages, including lower costs than those required to establish a new local bank, expedited regulatory approvals supported by the parent bank’s reputation, direct access to the parent bank’s correspondent networks, and the parent bank’s advanced technological and human resources, which could quickly extend to the local branches. It could also encourage foreign banks to enter the market, boosting investor confidence and facilitating trade transactions.

Improving Syria’s access to international transactions through correspondent banking with Turkish branches would ultimately depend on correspondent banks’ confidence in Turkish banks’ compliance procedures in Syria. Building that confidence would require continued risk-mitigation measures and prior consultations to dispel concerns while curbing overcompliance. 

But there are a few significant hurdles to clear beforehand. First, according to Basel Committee principles, the host authority (Central Bank of Syria) must obtain the home authority’s (Central Bank of Türkiye) non-objection before issuing a branch license, and both must establish frameworks for information exchange and coordinated supervision. The Turkish announcement referenced consultations between the two authorities without offering details on their substance or progress. Second, the Syrian Parliament, in line with its tasks under the 2025 Constitutional Declaration, must adopt amendments to Law 28 permitting the licensing of foreign bank branches. Other regulatory instructions must be issued to clarify the division of responsibilities between parent banks and their local branches.