The outbreak of war in Sudan plunged the banking sector into chaos. Brutal looting swept through banks and ATMs, with branches across Khartoum ransacked. Safes were dismantled, property stolen, and several branches set alight. These violent scenes were both shocking and unfamiliar to Sudanese citizens. The war erupted unexpectedly just before Eid al-Fitr, leaving many without the funds they needed, as they hadn’t anticipated the need to withdraw money. Overnight, bank branches were reduced to ruins, with smoke rising from the debris.
over 70 per cent of their active branches across the country shutting down. Bank assets, estimated at 45 trillion pounds, were instantly halved in value as the national currency plummeted by more than 50 per cent
Immediately after the conflict began, all 39 of Sudan’s government and commercial banks ceased operations, with over 70 per cent of their active branches across the country shutting down. Bank assets, estimated at 45 trillion pounds, were instantly halved in value as the national currency plummeted by more than 50 per cent. Financial experts predicted a collapse of the banking sector, doubting that loans to clients could be recovered. Most investors had lost their businesses, and industrial operations had come to a standstill.
Descent into crisis
In a bid to stave off total collapse, banks introduced drastic measures that severely impacted staff and operations. Large numbers of employees were laid off, and others placed on unpaid leave. These measures affected over 45 per cent of the banking workforce, raising fears about the future of Sudan’s banking sector.
The Bank of Khartoum placed 1,215 employees on unpaid leave, accounting for 45 per cent of its workforce. Similarly, Faisal Islamic Bank laid off more than 1,100 employees. Dismissed workers took their case to the labour court in Port Sudan, but justice has yet to be served.
Despite these actions, banks struggled to prevent collapse. The Sudanese pound continued to fall, lenders hesitated to repay debts, and the nation’s exports stalled. Illegal import routes flourished, deposits dwindled, trust between banks and clients eroded, and foreign capital fled.
The Central Bank of Sudan, itself a target of looting and arson, confirmed that banks had suffered widespread theft and destruction. In response, Governor Burai Al-Siddiq issued a statement attempting to reassure the public. He said that banks had quickly restored their historical data and resumed managing the strategic portfolio, providing foreign currency and facilitating petroleum imports. He denied that Sudanese banks had collapsed and hinted at a possible currency change, although he acknowledged the complexities of such a move. He reassured depositors that their funds were safe and that the situation was under control.
However, as the war dragged on, spreading to volatile regions in Darfur, Kordofan, and the central states, dozens of bank branches were fully looted and forced to close. The Sudanese pound continued its sharp decline.
Historical shocks
This isn’t the first time Sudanese banks have faced severe challenges. The banking sector in Sudan, modernised with the establishment of the Anglo-Egyptian Bank in 1913 and Barclays Bank DCO in 1916, has faced political and economic crises that have destabilised the banking system.
“The first and greatest catastrophe came with the nationalisation process from 1970 to 1975,” said former banker Tarig Suleiman in an interview with *Atar*. He explained that this period triggered a brain drain, with many banking professionals emigrating. These professionals carried with them a tradition of secrecy, discipline, and integrity—qualities that defined Sudanese banking.
In 1992, the Islamic Front government established the “Supreme Authority for Shariah Supervision” to Islamise the banking system, ensuring operations were free from usury. The state sold off most public sector assets, retaining only four government-owned banks, including three specialized banks and one commercial bank out of a total of 39.
Suleiman criticised the uncontrolled proliferation of bank branches and ATMs in Sudan, describing it as “banking chaos” due to ambiguous ownership, capital sources, and management structures.
Rise of "phantom banks"
All banks have collapsed except Bank of Khartoum,” he noted, pointing out that this bank, significantly owned by Emirati institutions, holds 80% of Sudanese deposits
Suleiman referred to post-war banking as “phantom” operations, where banks offer only basic deposit and withdrawal services. “All banks have collapsed except Bank of Khartoum,” he noted, pointing out that this bank, significantly owned by Emirati institutions, holds 80% of Sudanese deposits. Its Bankak service remains widely used.
Bank of Khartoum’s largest shareholder is Dubai Islamic Bank, alongside other Gulf investors such as Abu Dhabi Islamic Bank and Sharjah Islamic Bank. The remaining shares are owned by prominent regional businessmen and Sudanese investors, including the Fadl Mohammed Khair family.
An anonymous branch manager informed *Atar* that the cash circulating in Sudanese banks post-war is largely fictitious, as most capital was looted by the Rapid Support Forces. He added that the actual liquid cash does not match the figures reflected in banking transactions, which rely on the “Siraj” system due to the absence of a clearing system. “If the war continues, most banks will collapse due to the mismatch between expenses and income,” he warned.
The branch manager also pointed out the high risks associated with electronic banking, noting that recovering loans has become impossible due to war-related looting. “The economy now relies on taxes, levies, and fees taken from citizens,” he said.
Fragile hope
Some banks survived due to their proximity to the Sudanese Armed Forces, which controls key sectors of the economy, particularly in gold and exports. The state directed revenue-generating institutions, such as customs and tax authorities, to open accounts with these banks, in violation of Ministry of Finance regulations. This favouritism, according to the branch manager, further destabilises the banking system.
Some banks survived due to their proximity to the Sudanese Armed Forces, which controls key sectors of the economy, particularly in gold and exports
Former Islamic Bank of Sudan administrator Taj Al-Sir Al-Ebeed suggested that looted deposits might be recovered through banks’ accumulated profits. However, he expressed concern over the challenges of attracting new suppliers or investors in the current climate. While counterfeit currency is a concern, looted batches that don’t bear the required serial numbers are easily detected.
Al-Ebeed described workforce reductions as a “major dilemma,” as dismissed employees face compensation issues and a lack of justice under emergency laws. He said the hope lies in ending the war and restoring labour laws.
Road to recovery
Banking expert Tarig Suleiman proposed that Sudan’s banking system should be restructured and reorganised under the supervision of the Central Bank. He recommended reducing the number of banks to six or ten, with capital contributions of at least $100 million, rising to $500 million within three years. This would involve merging and liquidating underperforming banks. Suleiman also called for the Central Bank to regain independence and manage the state’s financial resources.
Another expert suggested that the recovery of Sudan’s banking sector would depend on support from the Central Bank, which should issue policies to address losses over the next two decades and write off doubtful debts over at least ten years. He also emphasised the need for currency reform and policies that stabilise the exchange rate and incentivise exports.
Without these reforms, and the cessation of hostilities, Sudan’s banking system faces an uncertain future.
Appendix
Impact of April 15 war on Sudan’s banking sector
By Amna Murtada – Fadia Salih
Sudan’s banking history dates back to the colonial era when the use of currency expanded significantly. Barclays Bank of London opened its Sudan branch in 1913, followed by Crédit Lyonnais of France in 1953. These foreign banks dominated Sudanese banking with a network of 37 branches across the country.
Sudan’s independence brought profound changes, starting with the establishment of the Central Bank of Sudan in 1960. This was followed by the founding of specialised development banks to meet growing market demands, such as the Agricultural Bank, the Industrial Bank, the Real Estate Bank, and the Commercial Bank.
In 1978, Faisal Islamic Bank of Sudan was established, pioneering the Islamic banking system. By 1990, all Sudanese banks, including the Central Bank, had adopted Islamic banking principles. A dual banking system emerged between 2005 and 2010 during the peace agreement era, adding a new layer of complexity to the sector.
By 2014, the number of banks had risen to 37, and by February 2023, there were 38 banks with 871 branches. The sector’s capital and reserves stood at $420 million, with eight foreign banks controlling 22 per cent of banking assets. The total assets of the banking sector were estimated at $7 billion, representing 26 per cent of Sudan’s total assets. Despite this, Sudanese banks faced numerous challenges from 2018 onward, including capital shortages and a severe lack of foreign currency. Among these, the Bank of Khartoum stood out with 125 branches, followed by the Agricultural Bank with 105 branches.
Banking after the April 15 war
The April 15 war caused unprecedented devastation to Sudan’s banking sector, compounding pre-existing structural challenges. Over 100 bank branches across Sudan were looted or destroyed, and 38% of Khartoum’s banking capital was stolen. More than 70% of the nation’s bank branches were forced to close, pushing the sector to the brink of collapse.
The Central Bank of Sudan attempted to manage the crisis, but with limited success. In its sixth bulletin, issued on September 30, 2023, the Central Bank announced the recovery of 427 of the 871 bank branches. However, as the war expanded to the states of Gezira, Sinnar, and Darfur, these gains quickly reversed, worsening the situation.
To stabilise the Sudanese pound and curb its depreciation, the Central Bank reduced the ceiling on transfers through banking apps. However, the currency continued its steep decline, from 570 pounds per dollar before the war to nearly 2,000 pounds by March 2024.
In a bid to stabilise the financial sector, the Central Bank issued new directives on March 30, 2024, prioritising productive sectors and banning financing for 11 areas, including foreign currency trading, stock, and gold purchases, with limited exceptions for local trade operations.
To address war-related losses, the Central Bank implemented temporary measures on July 25, 2024, including scheduling the recovery of looted capital over eight years and extending asset recovery timelines to ten years. Provisions were also introduced to restructure defaulted loans for pre-war operations over 18 months.
On June 25, 2024, the Central Bank launched a joint financing portfolio, led by Bank of Khartoum, to provide $1 billion in foreign currency. This initiative aimed to improve foreign exchange allocation for importers and secure strategic goods identified by the Ministry of Trade and Supply.
Challenges facing banking sector
Sudan’s banking sector faces major challenges, including the spread of war into states previously deemed safe, resulting in further closures and destruction of bank branches. Communication networks, essential for electronic banking and mobile apps, have become unstable, disrupting financial transactions.
Debt recovery has become increasingly difficult due to the destruction and looting of companies and institutions, leaving them unable to repay their loans. This, coupled with the government’s need to borrow from the Central Bank to meet its growing budget deficit, further weakens the sector’s recovery prospects.
The war has also led to a severe shortage of foreign currency reserves, limiting the banks’ ability to meet demand and hampering foreign trade transactions.
Banks operating after April 15 and their geographical distribution
Post-war, Sudan’s banking landscape has changed dramatically, with the distribution of branches significantly impacted. Several banks have ceased operations in war-affected areas. The latest data, compiled from open sources and updated bank websites, illustrates the geographical shift in branch locations across the country.
