Algeria plans to allow its dominant state banks to list on the local stock exchange to help develop its financial markets and diversify sources of funding after the oil price slide, a senior financial official said.
The plan is expected to open the door for foreign investors to acquire controlling stakes in banks, reversing a rule requiring Algerian firms to keep a majority shareholding in any partnership with foreigners, the official said.
Algeria’s six government-run banks account for most of the sector’s assets.
French companies such as Societe Generale SA and BNP Paribas SA have the strongest presence among foreign-owned banks already working in the country.
OPEC member Algeria’s economy has been largely based on a state-run and centralized system since its independence from France in 1962 and it remains reliant on an energy sector that still provides 60 percent of its budget.
However, the oil price drop since 2014 has put Algeria under financial pressure, forcing the government to trim spending and search for alternative financing sources.
“The era of [US]$100 a barrel is over. We have no choice but to change our policy,” the official said, asking not to be named because they were not authorized to speak to the media.
“Reforms will move slowly, but there will be no step backwards,” the official said.
With more than US$130 billion in foreign exchange reserves and little foreign debt, Algeria is in better shape than other oil producers such as Venezuela.
However, it has been forced to push up taxes and increase subsidized gasoline and diesel prices, scaling back a vast welfare system that has in the past helped ease social tensions.
Advocates of the 51/49 ownership rule and tight foreign exchange controls say they help protect Algeria’s strategic sectors after an experimentation with privatization in the 1990s, but critics say such curbs stifle growth and investment.
It is not the first attempt at selling off the banks. The government scrapped previous plans for a bank privatization in 2007, just two days before the deadline for the submission of bids, citing an international banking crisis at the time.
That plan was to sell a majority state in Credit Populaire d’Algerie (CPA) — two years before the introduction of the new rule limiting ownership for foreign firms to 49 percent in any partnership deal.
The IMF and World Bank have since repeatedly urged Algeria to reform the underdeveloped banking sector and modernize its stock exchange to help attract investment.
However, it is not clear how much appetite there would be for the banks.
Plans to float cement producer Societe des Ciments de Ain El Kebira were dropped in June because of a lack of demand for the shares on offer.
The new bank proposal is included in next year’s budget law draft currently in parliament for debate and must be approved by lawmakers and by Algerian President Abdelaziz Bouteflika.
Under the new plan, state banks that want to list on the Algiers bourse will still have to get “prior green light” from the central bank before any step to sell a stake in excess of 49 percent, the official said.
The other state banks consist of Banque Nationale d’Algerie, Banque Exterieure d’Algerie, Banque de Developpement Local, Banque de l’ Agriculture et du Developpement Rural, the largest in terms of its network, and the Caisse Nationale d’Epargne et de Prevoyance.
Officials have previously said Algeria is preparing to allow foreign investors to buy shares on its stock exchange, where authorities hope the number of listed companies will rise from five to 50 in the near future.
However, the Algiers stock market, smaller than those in neighboring Morocco and Tunisia, struggles with very low levels of liquidity.
NO VIRUS BLUES: A SEMI Taiwan official said that the virus does not slow down the global semiconductor industry’s investment in manufacturing equipment The production value of the nation’s semiconductor industry is expected to grow 16.7 percent this year from last year, outpacing the global industry’s 3.3 percent growth, industry association SEMI said yesterday. That would help Taiwan safeguard its second spot in the global semiconductor market with a production value of more than NT$3 trillion (US$102.73 billion), SEMI Taiwan president Terry Tsao (曹世綸) told a media briefing in Taipei for the Semicon Taiwan trade show beginning today. The global semiconductor industry’s production value is expected to increase to US$426 billion this year, SEMI said. In terms of semiconductor equipment investment, equipment billings from Taiwanese firms
Intel Corp has received licenses from US authorities to continue supplying certain products to Huawei Technologies Co (華為), a company spokesman said yesterday. Washington has been pushing governments around to world to squeeze out Huawei, saying that the telecom giant would hand data to Beijing for espionage. From Monday last week, new curbs have barred US companies from supplying or servicing Huawei. This week, the state-backed China Securities Journal reported that Intel had received permission to supply Huawei. China’s Semiconductor Manufacturing International Corp (SMIC, 中芯國際), which uses US-origin equipment to make chips for Huawei and other companies, last week confirmed that it had sought
INVEST IN TAIWAN: A metal components casting firm and the world’s largest maker of aluminum bicycle rims also obtained approvals to join the program Solar Applied Materials Technology Co (SOLAR, 光洋應用材料), a part of Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) “green supply chain,” has pledged to invest NT$1 billion (US$34.1 million) to build a new plant at the Tainan Technology Industrial Park (台南科技工業區), the Ministry of Economic Affairs said yesterday. SOLAR has been collaborating with TSMC to extract precious metals from waste and reuse them as “sputtering target” material in high-end semiconductor manufacturing, a TSMC press release issued in May said. Established in 1978, SOLAR also offers key materials and integrated services to customers in the optoelectronics, information and communications technology, petrochemicals and consumer electronics industries,
Swancor Renewable Energy Co (上緯新能源) yesterday announced plans for a 4.4 gigawatt (GW) offshore wind project off Miaoli County as part of its commitment toward Taiwan’s energy transformation, the company said in a statement. The “Formosa 4” project includes three deep-water wind farms 18km to 20km off the coast, Swancor Renewable CEO Lucas Lin (林雍堯) said, adding that planning for the project began last year. A proposal for Formosa 4 was this week submitted to the Environmental Protection Agency (EPA), the company said. Swancor Renewable jointly developed the Formosa 1 project, a 128 megawatt (MW) wind farm about 4km off Miaoli and the