In Tunisia, it is not the banks that finance the economy…
It is the economy that finances the banks.
This is what we call a dysfunctional system that will lead to a crisis sooner or later.

I have been a faithful observer of the current economic situation in Tunisia for the past four years, and the matter of the Tunisian public banks has been the subject of numerous conversations I have had with various people. I have decided to put the situation into perspective and summarize my thoughts about the matter.

What is a bank?

A bank is a financial institution that provides financial services to their customers. These services are mainly accepting deposits and providing loans. A less complex definition is “a bank is a place where people can keep their money and borrow money.”

Banks play an important role in today’s economies, and a large number of business and individuals benefit from their services. Since these financial institutions provide short- and long-term loans, individuals and companies benefit to buy real estate, cars, machines, etc. So these loans contribute to the movement of the economic cycle in a general way.


There are different types of banks that provide different services for a wide range of customers, such as industrial, agriculture, real estate, tourism, etc.

Tunisian banking sector

A relatively young sector, the Tunisian banking sector was born after the country’s independence in the 1950’s .The sector has gone through major transformations and upgrades over the past three decades or so.

It is currently composed of 29 institutions, 11 of which are publicly traded in the Tunisian stock market.

According to the Tunisian Central Bank report in 2012, the banking sector has provided the economy with credits up to 45.5 million dinars, where the total customer deposit has reached 43.9 million dinars.

Click to enlarge (Source: Bulletin Statistiques Financières n°191, Juillet 2015, Banque Centrale de Tunisie, page A24 )

This gives Tunisia a deposit-loan ratio of about 83%, a ratio considered low if compared to other countries in the region such as Morocco, Jordan and Egypt.

The three public banks

Among the 29 banking institutions in Tunisia, there are 3 public banks: STB, BNA and BH. These 3 banks hold about 38% of banking assets, which means that the fate of these banks is of immense importance to the country’s economic equilibrium.

Mainly held by the Tunisian state, these banks attract the interest of many private investors. Such interest has been publicly manifested through the speculations made on the banks publicly traded stock in the Tunisian Stock Market.

The stocks of the Tunisian public banks have reached record performances during the year 2015, according to the public records of the stock market.

Nevertheless, the health of these banks has been the subject of public discussion from the early days of 2011. Many analysts and financial experts have expressed their concerns that the Tunisian economy is at great risk if we do not find immediate and drastic solutions for the grave situation these banks are facing.

It is to note that similar to other economic sectors, the financial sector is a very competitive one, with almost thirty institutions providing practically the same services, making success based upon small details, like better customer services, better communication strategies, technological innovations and their integration into the bank’s operations.

The points laid out here are not verified for these public banks. Run by government employees who don’t have to answer to any share holders as in other institutions and don’t have any financial targets to reach, banks are poorly managed and slow to develop.

What is this situation exactly?

The answer is quite complicated to explain, so I will try to put it as simply as possible:

As mentioned before, about 38% of the total assets in the economy are held by these public banks, which means that 4 of 10 loans disbursed to companies are financed by 1 of the 3 Tunisian public banks.

So if one day these banks find themselves in trouble, more than 1/3 of the companies operating in the economy will be facing serious liquidity problems since the banks will not provide the cash these companies need to function. It is also relatively well-known that most companies in Tunisia lack capital and are under-capitalized, meaning that cash is a vital element to the survival of these companies.

Nevertheless, our public banks have almost 35% of the total deposits in the Tunisian economy. Any potential collapse or the inability to honor daily liquidity needs will have a disastrous impact on the economy and on the people who keep their money in these banks.


At any given time, when a certain financial institution of which the weight is heavy (loans, deposits, number of clients), the government is obliged to back it with funds to save the ordinary employee who has saved his money in this institution and would lose all his savings if the bank goes down.

A famous case of banks being rescued by government is the case of the ‘Société Générale’, a French bank that faced in 2008 deep issues following the sub-prime crises. This bank benefited from a loan of 1.7 billion euros from the French government. In addition, the bank benefited from a similar loan of the same amount a second time.

Many other French banks faced similar issues, and had no other option than to receive cash injections from the government in order to survive. We can cite the examples of the ’Crédit Agricole’, BNP, Crédit Mutuel.

The French government spent a total of about twenty billion euros to help the country’s major banks recapitalize and surpass the global financial crisis.

If the French government invested all of this money to help these institutions, it is because it recognizes that the closure of one of these banks would cause economic damage of which the value would be higher than the money originally invested to save them.

If one falls, they all follow: Systemic Risk

The risk we are talking about it called ’Systemic Risk.’

What is exactly the current situation?

Well, let us take a look:

The STB: the Tunisian State holds about 52% of the bank’s capital. The rest are shares of private Tunisian investors (37%) and foreign investors (10%).

The BNA: the Tunisian State holds 23% of its capital. But if we add the shares of the public and semi-public companies, the participation of the Tunisian state in the BNA’s capital gets as high as 64%. What is left is held by private investors.

The BH: The State has about 56% of its capital; the rest is held by private investors.

As you can see, the Tunisian State is largely invested in the 3 public banks in a way that significantly affects public interest and the strength of the Tunisian economy.

Did Tunisian government have another solution?

Let us see what the options are exactly:

The only direct options the Tunisian State had to deal with the issues facing these 3 public banks were twofold:
To give capital (inject more money) or to lend these banks cash. The choice between these two options actually depends on the duration in which the banks can get over this potential inevitable crisis and recover.If the recovery period is from 2 to 5 years, lending cash on this short term would seem logical. Other than that, injecting more money in the capital of these banks would be a better strategic solution.

To determine which of these two methods is the more appropriate in the current situation, we had to audit of the accounts of the banks.

Why an audit?
The origin of the current situation facing banks is the inflated loans given to the relatives and friends of the fallen dictator Ben Ali, a total of some 2300 million Tunisian dinars. About 2/3 of this debt, or 1500 million Tunisian dinars, is in the tourism sector.

However, we all know that tourism in Tunisian has taken the strongest hit in the period following the Bardo and Sousse terrorist attacks, so the ability of the tourism sector to pay debts and regain its former activity presents a great challenge.

An audit is therefore important for the Tunisian government to identify the liability of these banks and to evaluate the situation by answering a simple question:

Are these problems due to mismanagement and poor decisions made by the banks, or do they reflect a general economic malaise stemming from the inability of many of the banks’ large clients to repay the debts?

In the light of these facts and questions, we hope that the decision for capital injection was based on a financial evaluation, and not on political interests.

From Wikipedia, Tourism in Tunisia/Statistics

In order for capital injection to be of use for Tunisian tax payers, the 3 banks need to find a long-term solution for their structural problems, especially for internal mismanagement and the indebtedness of more than 800 touristic establishments in the country. If this does not occur, after 4 to 5 years the same process will be repeated again, and we will see the government asking the deputies to approve another capital injection into the public banks.

What are the guaranties given to the Tunisian government to assure that public money is not wasted?

Like every creditor, the Tunisian National Assembly must practice good governance of public money–tax payers’ money. A special committee needs to be created to oversee and control the restructuring and the effective management of the 3 public banks.

And here is where all the ways end!

We did not see such steps taken to ensure that the banks follow certain guidelines of good governance. One possible approach is to designate certain members of this committee to serve on the board associations for these banks; these members would observe and oversee the decision processes and report the details to the committee.


It is of great importance the CEO’s of the public banks are selected by this committee as well, and the selection should be based on high standards for experience, work ethics, and the ability to perform a total restructuration of these banks.

Final thoughts…

We must appreciate the extent to which the tourism sector has taken a chunk of the total monetary mass dedicated to finance the economy. This sector is highly sensitive to political events and embodies the worldwide image of country and its ability to present competitive products on par with those originating in places such as Morocco and Greece.

Some of the money absorbed by this sector could have been allotted to regional development, infrastructure, education, information and communication technologies, finance, highly innovative technological projects and to reduce regional disparities. I would personally recommend for investment in developing Tunisia as the number one technological destination in Africa.

We have the human resources necessary to build this profile, but a large number of competent engineers and skilled professionals are leaving the country to work for tech-companies in Europe. Why don’t we attract such individuals and companies to work here?

The cost will be less, and the Tunisian government will provide the necessary infrastructure and legislation to encourage innovative companies to come and set up here.


The health sector is a very interesting sector in which to invest over the long-term.

We have some of the best doctors and specialists in the world, but the country does not benefit from their skills due to a lack of investment in research labs and the absence of companies that provide innovative opportunities for these skills.

I could go on and on with examples and suggestions, but I want to limit the scope of this article to the banking sector. I will try to cover these topics in future posts.

Please feel free to comment or leave me a message, and if you have any questions about this article or any other publication on my blog, do not hesitate to reach out!

● Opinions and thoughts expressed here are my personal analysis of the subject and the advice I give are based on my full personal analysis of the current situation. I will be more than happy to further discuss with details some of the things published in this article.
● All the numbers mentioned in this article are publicly available on the websites of the 3 banks described, as well as on wikipedia and Tunisia’s Central Bank website.

I have been closely following the topic of Tunisian public banks for a while and I have taken the time to read dozens of publications and articles online through BusinessNews, Nawaat, Tunisie Valeurs, Ilboursa, African Manager and many publications by economist friends and colleagues on personal websites, so I am well-informed about the matter of the public banks in Tunisia.