Tunisia - Banking SystemsTunisia - Banking Systems
The Tunisian banking sector is composed of 30 banks, 12 of which are publicly traded on the Tunisian stock market. The largest banks are the state-owned Société Tunisienne de Banque (STB), Banque National Agricole, and Banque de l’Habitat (BH), which collectively represent 40% of banking assets and 34% of banking sector deposits. The Central Bank of Tunisia (CBT) strictly regulates the country’s banks. The CBT insists bank reserves and balance sheets comply with international standards. All Tunisian banks are under pressure to improve their performance and balance sheets. Recent bank actions include continued reductions in non-performing loan (NPL) ratios, implementation of tighter credit risk controls, enhanced recovery procedures, and upgrades of under-developed IT applications.
Tunisia signed a four-year agreement with the International Monetary Fund (IMF) in May 2016 that included commitments to enhance the CBT’s independence and to strengthen the effectiveness of monetary policy to ensure greater exchange-rate flexibility. The commitments also include measures to strengthen reserve buffers, facilitate external adjustment, restructure public banks, improve banking resolution and supervision frameworks, develop credit bureaus, and relax caps on lending rates to increase access to finance. To comply with these recommendations, Parliament adopted a new Central Bank Statute in May 2016, as well as laws regarding recapitalization of BH and STB in August 2015. Other recent reforms include mandates for financial stability, consumer protection, and emergency liquidity assistance to insolvent banks, as well as a macro-prudential oversight committee to ensure the banking system’s overall stability.
Despite these reforms, the Tunisian banking system remains fragile. According to the CBT banking supervision report, the overall capital adequacy ratio of the Tunisian banking system, which measures the ratio of banks’ capital to their risk, stood at 11.9% in 2017, over the regulatory requirement of 10%. NPLs rose to 13.9% of total loans by value in 2017.
Public banks are structurally illiquid due to low deposit growth, which increases their recourse to CBT refinancing.
Tunisia signed a four-year agreement with the International Monetary Fund (IMF) in May 2016 that included commitments to enhance the CBT’s independence and to strengthen the effectiveness of monetary policy to ensure greater exchange-rate flexibility. The commitments also include measures to strengthen reserve buffers, facilitate external adjustment, restructure public banks, improve banking resolution and supervision frameworks, develop credit bureaus, and relax caps on lending rates to increase access to finance. To comply with these recommendations, Parliament adopted a new Central Bank Statute in May 2016, as well as laws regarding recapitalization of BH and STB in August 2015. Other recent reforms include mandates for financial stability, consumer protection, and emergency liquidity assistance to insolvent banks, as well as a macro-prudential oversight committee to ensure the banking system’s overall stability.
Despite these reforms, the Tunisian banking system remains fragile. According to the CBT banking supervision report, the overall capital adequacy ratio of the Tunisian banking system, which measures the ratio of banks’ capital to their risk, stood at 11.9% in 2017, over the regulatory requirement of 10%. NPLs rose to 13.9% of total loans by value in 2017.
Public banks are structurally illiquid due to low deposit growth, which increases their recourse to CBT refinancing.
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