Banking

The Tunisian financial services industry, of which banking is by far the largest component, accounted for 3.7% of the country’s GDP in 2014. Sector activity rose by 3.8% in 2014 and a further 3.3% during the first nine months of 2015 compared to the same period a year earlier. The sector’s trajectory is largely positive, with lending and leasing activity growing rapidly in recent years, but the stability and profitability of the sector has been negatively affected by poor performance at several large state-owned banks as well as by market fragmentation. However, year 2015 saw several of these institutions recapitalised alongside changes made to their management structures. The recapitalisation of key public banks is set to return the sector to comparative health as well as help to address the wider issue of tight liquidity in the market. While it is uncertain if management changes at the banks can ensure they do not again start to build up poor loan books, the improvement of the democratic environment should reduce pressures for politically-connected lending that occurred in the past. This should in turn help to bolster financial sector stability, as should plans to raise prudential ratios under the new banking law, which will also help to support continued rapid growth in emerging niches including Islamic banking and leasing. This chapter contains interviews with Chedly Ayari, Governor, Central Bank of Tunisia (CBT); and Ahmed Rjiba, CEO, Banque de l’Habitat.