The Moroccan parliament has recently approved a draft reform of the banking law, which will give the kingdom's central bank greater powers to control banks and to enforce international standards. This law constitutes an update for a series of legislative reforms, which have considerably liberalized and opened-up the local banking system since 1993.
Today, Morocco's banking system consists of 16 banks. Although competition within the country's commercial banking sector has intensified in recent years, competition among Moroccan banks is still rather limited, and banks, in practice, do not compete on deposit and lending rates, except for large customers. However, it seems that as a result of this limited competition Moroccan banks are generally sound and stable. 
Furthermore, Moroccan banks are largely in compliance with the Basel standards. They are supervised on a consolidated basis and must provide statements audited by certified public accountants. In contrast to this situation in the private sector, there are actually a number of state-owned specialized banks (in particular Caisse National de Credit Agricole and Credit Immobilier et Hotelier), which are currently under investigation for bad management and corruption.
Another important development that was achieved in the banking sector, was the authorization given to foreign exporters, and Moroccan expatriates, to open foreign currency accounts in Moroccan banks (a decision which enabled Morocco to considerably increase its foreign currency reserves). This approval together with the new legislation that enables foreign investors to receive credit on the local market, were important for the government's effort to encourage further foreign investment in the kingdom.
Foreign investors nowadays may freely enter the Moroccan market and participate in the local stock exchange, but commercial banks must still have a majority of Moroccan ownership. Nevertheless, leading international banks have lately been showing great interest in entering the Moroccan market and collaborating with local banks. A leading financial consultancy in Europe has told MENA Report that several months ago a major financial organization had approached it in this matter and asked to examine the feasibility of cooperating with one of the leading private banks in Morocco.
The consultancy officials refused to disclose further information concerning the exact nature of this planned cooperation but emphasized that it is going to focus on a number of specific fields, "which currently have much more room to develop."
© 2005 Mena Report (www.menareport.com)
Banking & Finance
