ALGIERS, 5 February 2021 – Banks in Algeria have until next June 30 to raise their capital to a minimum of 20 billion dinars ($150 million), according to a revised directive from the Central Bank.
The decision also raised the minimum capital for financial institutions, like credit unions, from 6.5 billion dinars ($49 million).
The regulator granted banks and financial institutions an additional six months to meet the requirements.
Algerian authorities said they took into account the downturn in economic activity indued by the new coronavirus pandemic.
There have been few new entrants, exits, mergers, acquisitions or privatizations of note in the Algerian banking sector since the industry turned around after a difficult 2017.
In early 2018, the Algerian government backtracked on plans it had earlier announced to float one or more of the state-run banks on the local stock exchange.
In Algeria, all businesses must maintain the 51:49” investment rule, which prohibits foreign investors from holding majority stakes in any Algerian business.
Investors have often pointed to this rule as a barrier to both the import of capital by existing financial institutions and the entrance of new foreign banks.
The directive concerns all 20 banking institutions operating in the country, as of 31 December 2020, and all eight financial institutions licensed to do business in the north African country.
Of the 20 banks operating in Algeria, six state-run banks retain the lion’s share of the market, accounting for nearly 90 percent of deposits and sector assets, according to latest data.
Private banks – most of them foreign-owned – control the remaining ten percent of the market.
Several of these banks, according to the Central Bank of Algeria, had not yet met the requirements of upping their capital by the initial deadline of 31 December 2020 fixed by the regulator.