2.2. Banking and Finance

Significant measures have been taken to consolidate and modernise the banking environment and to improve diversification of financing sources. Privatisation of the banking environment has been accelerated, the legal and regulatory framework modernised by introducing universal banking and alignment to international prudential standards. The action plan targets enhanced banking operations by consolidating the financial base, strengthening prudential and supervisory regulations, and modernising management methods and quality services.

The banking environment includes the Central Bank, 20 trade and development banks, two investment banks, eight offshore banks, nine offices representing foreign banks, and specialised financial institutions such as two factoring companies and 11 leasing companies. Interest rates are freely set.

Banking legislation has strengthened prudential rules and the solvency ratio. The commitment/capital equity rate is 8 percent, in accordance with Basle II international norms. The latest reforms have introduced the concept of universal banking and implemented an electronic clearing system for transactions, implemented a scheme to guarantee deposits and loans as well as made considerable progress in introducing electronic money.

The sector is being opened to foreign partnerships and the government sold its 52 percent stake in the Union Internationale de Banque (UIB) to the French Société Générale while privatising the Banque du Sud. The money market has undergone major transformation in both structure and products. It is managed by a private entity and the monetary market council regulates the sector and monitors operations.

Quotation on the stock exchange is handled by an electronic system and there are 46 companies currently listed on the Tunis Stock Exchange. Acquisition by foreigners of shares in companies listed on the stock exchange does not require authorisation if no more than 50 percent of capital is acquired. Foreign investors hold 21 percent of market capitalisation.

Close-ended (SICAF) and variable (SICAV) investment companies and private capital venture funds (SICAR) have multiplied, numbering 158 at the end of 2002.

The Tunisian Dinar is convertible for current operations since 1994 and the foreign exchange market handles buying and selling of foreign currency.

Transfers relating to capital income (profits, remuneration of founders’ shares, dividends, percentages and attendance fees, interest on loans), transfers relating to commercial deals and related operations, and transfers relating to production operations and real net proceeds from the sale or liquidation of capital funded by means of imported hard currency, are free.

Market capitalisation amounted to TD 3.840 billion in 2005, with 46 listed companies.

The BVMT Index (base 465.77 on 31 March 1998) hit 1142.46 points (974.82 in 2004) and the TUNINDEX index (base 1000 on 31 December 1997) rose to 1615.12 points (1331.82 points in 2004). The liquidity ratio was 55 percent.

The program for implementation of an alternative money market on the Tunis Stock Exchange began on 1 March 2006. This initiative aims at facilitating access by industrial SMEs to the money market so they can diversify their sources of financing. Companies that want to be listed on this new market (which will have simplified admission criteria) can take advantage of expert advice to prepare for quotation on the stock exchange. Initial quotation should take place by 1 March 2007.

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