The Banking System
The Tunisian banking system is a mixture of private and state-owned institutions with varying ranges of financial instruments and services. It is composed of 14 commercial banks, eight development banks, five portfolio management institutions, eight leasing companies, eight offshore banks, and two merchant banks. The banks are strictly regulated by the Central Bank of Tunisia, which has increasingly insisted upon prudential norms for bank reserves and balance sheets close to international standards in recent years. In 1993, nearly 37 percent of overall bank portfolios were considered to be non-performing, but by 1999 this rate ad been reduced to under 25 percent. During this same time frame, the rate of non-performing loans at commercial banks was cut in half from 34 percent to 17 percent. In 1999, the World Bank approved a $159 million loan to support banking sector reform efforts in Tunisia. Tunisian commitments under the WTO and the EU free trade agreement to begin liberalizing its banking sector will likely force more serious reform measures over the next five years.