IslamicFinance.de

The European Union's second highest court has annulled an EU asset freeze on Syria International Islamic Bank, dealing another blow to EU sanctions following legal victories last year by several Iranian companies. The EU imposed sanctions on SIIB in 2012, alleging that it had acted on behalf of two other banks, Commercial Bank of Syria (CBS) and Syrian Lebanese Commercial Bank (SLCB), that were both under EU sanctions. But the court said the bloc's governments had failed to provide evidence. The bank has also been sanctioned by the U.S. Treasury. The ruling is subject to appeal.

The European Union on Thursday lifted sanctions on the Syria International Islamic Bank and businessman Sulieman Maarouf with ties to Syrian President Bashar al-Assad who lives in London. The moves came as part of a decision to extend the Syria sanctions on nearly all targets for another year, until June 1, 2015. A European diplomat said the decision to lift sanctions against the bank was taken because of a lack of strong evidence linking it to Mr. al-Assad's regime. The Syrian International Islamic bank was placed on the list because the EU alleged it facilitated transactions for the Commercial Bank of Syria and the Syrian Lebanese Commercial Bank. The list now includes 179 people and 53 entities that the EU says are "linked" to violent repression by Mr. al-Assad's regime.

Syrian banks prepare for worst-case scenarios after profits tumbled by between 40 and 90 per cent last year as the civil war further weakens the financial sector. Banking transactions such as trade finance or corporate lending have taken a big hit, while basic banking services continue despite the challenging environment. Therefore, several banks, including Byblos Bank Syria, have developed emergency plans to preserve business continuity. However, Syria's private lenders, an important part of president Bashar Al Assad's economic modernisation plan, are struggling with a mismatch of assets and liabilities.

The increase in bank robberies and fraud cases in Syria deepens the country's state of trouble. Already there are alerts to the country's stock exchange about major robberies in separate filings by foreign-backed lenders. A robbery in Homsled to the loss of 75.2 million Syrian pounds (Dh4.12m) which is a huge sum compared with 200m pounds profit the bank made last year. Unfortunately, the frequency of such incidents only gets higher.

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