The effect of the Arab League sanctions against Syria will be keenly felt by lenders that had tried to tap an underdeveloped banking market and build themselves into big players in the Levant.
Syria:
Sanctions Arab League sanctions will affect every area of industry in the beleaguered nation. Read all the stories in The National's special report Learn more
A number of Middle East banks, including Qatar National Bank, Bahrain's Al Baraka Banking Group, and Arab Bank, had established operations in Syria in recent years. Lebanese banks are also big players in the Syrian market.
National Bank of Abu Dhabi had applied for a licence in Syria, which had not been granted by the time the Arab League announced sanctions, said a bank source who asked not to be identified.
But banks are quickly reassessing their exposure to a country that is facing international opprobrium.
Banque Saudi Fransi announced on Saturday it had sold its 27 per cent stake in Bemo Saudi Fransi Syria and a 10 per cent stake in Bemo Lebanon. "The financial risks in the Arab Republic of Syria do not permit Banque Saudi Fransi to continue as partner," the bank said in a statement to the Saudi stock market.
The effect of Arab League sanctions against Syria would mean a tougher outlook for Lebanese banks such as Bank Audi and Bank Byblos, said Elena Sanchez-Cabezudo, an analyst at EFG-Hermes.
Relative to their native Lebanon, the size of the Syrian population and the market's underdevelopment had spurred Lebanese banks to expand into Syria, Ms Sanchez-Cabezudo said. "Definitely, they're not going to want to exit Syria. It's a very strategic area for them."
The unrest has prompted a withdrawal of funds from Syria, with deposits at local banks falling 9.3 per cent to 1.096 trillion Syrian pounds (Dh80.4 billion) between January and May, when the Central Bank of Syria last published data.
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