Syria's banks are witnessing a cull at board level, adding to the already difficult conditions facing the sector hit by sanctions, losses and robberies amid a deepening civil war.
Syrian lenders hit by board resignations amid 'political exposure'
Officially reported as resignations, the changes come as individuals, some deemed too close to the regime, are being asked to step down to help to ease the pressure on financial institutions.
Other directors have shed their holdings in a bid to ensure they are not marked in the future.
"Some of the directors are politically exposed even though they are not formally sanctioned by the EU and their institutions are asking them to resign," said Anas Jawish, the listing and operations director at the Damascus Securities Exchange. "This has happened several times recently among several individuals."
Five out of the 12 lenders listed on the exchange have published regulatory filings posted on the bourse website to inform shareholders of an "emergency resignation" of board directors over the past two months, according to documents seen by The National.
In June, the United States put sanctions on Syria International Islamic Bank (SIIB), accusing the company of acting as a "front" for the Commercial Bank of Syria, also under US and international sanctions. "The sanctions on [SIIB] have triggered a big fear among bank directors about their personal and professional security," Mr Jawish said. "Many have been saying I don't want to have my name exposed in the future, or, to be associated with being on a board with somebody who is under sanctions," he added.
In some cases, the restructuring at board level has been a result of major shareholders who have been forced to sell their shares held as collateral on loans, as the economic crisis begins to take its toll on the wealthy, said a prominent investor who spoke on condition of anonymity.
"With the current shortage in liquidity, banks are executing on collateral or freezing accounts or property," he added.
Syria's private lenders, considered the crown jewels of president Bashar Al Assad's economic modernisation plan, are struggling with a mismatch of assets and liabilities amid a violent crackdown spurred by civil unrest. Until recently, lenders reported profits solely because of their foreign currency holdings as the Syrian pound collapsed over the almost year and half since the crisis began. They etched their first losses in the third quarter this year. Banking activity has almost completely halted, amid heavy withdrawals of deposits and loan defaults earlier this year.
The IMF has not provided figures on the Syrian economy since the start of violence.
The Damascus Securities Exchange has lost 40 per cent of its value since the uprising. The recent resignations reflect a lack of confidence from the country's business elite that Mr Al Assad's Baath-dominated government will survive, said Peter Middlebrook, the managing director of Geopolicy, an international management consultancy and think tank.
"There are people whose power comes from an affiliation from the government. But when the government may not survive, they start to leave positions to show that they don't have any loyalty to the government," Mr Middlebrook said.
But Syria's powerful business tycoons have been tough to evict.
They remain as shareholders without representation on the board.
Earlier this year, Byblos Bank removed the name of Rami Makhlouf, the cousin of Mr Al Assad and currently under international sanctions, from the public ownership listing of its Syrian subsidiary. Mr Makhlouf is a founding member and holds a 4.9 per cent stake in Byblos Bank Syria.
Meanwhile, Syrian financial institutions in the past three months have started reporting a rise of armed theft, looting and robbery at its branches located in "hot spot" areas.
Syria International Islamic Bank, its largest shareholder Qatar International Islamic Bank, last month said its Deir Al-Zor branch was subject to vandalism and theft.
"The event led to the complete destruction of belongings and equipment inside the building," the company said in a statement to the bourse.
"The bank has taken measures in the past to protect customer documents in a way that ensures the client and depositors rights," the statement added.
In September, the bank's Homs branch was targeted in a robbery that resulted in the loss of 75.2 million Syrian pounds (Dh3.9m). Banque Bemo Saudi Fransi, backed by Saudi Arabia's fourth-largest lender by market capitalisation, in the same month said it had incurred losses from fraud and forgery totalling 25m pounds in a separate filing.