Banking Sector in North Yemen: Deepening Challenges and Fears

The Central Bank of Yemen in Aden has withdrawn licenses from six commercial Yemeni banks in Sanaa, forming a fresh blow to the banking sector in the Ansar Allah (Houthi)-controlled areas.

In April, the Aden-based Central Bank gave the Sanaa-headquartered banks a two-month deadline to transform the center of their operations from Sanaa to Aden. However, the banks have failed to comply with the instructions.

The banks are Al-Tadhamon Bank, Yemen-Kuwait Bank, Shamil Bank of Kuwait and Bahrain, Al-Amal Microfinance, Al-Kuraimi Islamic Microfinance, and International Bank of Yemen.

With their licenses being withdrawn by the internationally recognized government in Yemen, the challenges of the banking sector in North Yemen have increased, and public fear has deepened.

Economic experts say that the decision of the Central Bank in Aden will have severe consequences for Houthi-controlled areas. Mustafa Nasr, the head of the Center for Studies and Economic Media, said, "The decision is critical and pivotal in its impact on banking activity in Houthi-controlled areas, as it will isolate the banking sector in those areas."

According to Nasr, allowing the branches of the six banks to operate in government-controlled areas will allow them to partially escape from complete collapse and continue to provide their services to citizens.

Though such a move may enable the Central Bank to control the exchange rate, Nasr indicated the Central Bank needs to take other procedures, including finding ways to get foreign currency through oil exports.

The Houthi group has expressed fury over the Yemeni government's decision, which stopped several exchange companies and commercial banks, saying that the economic war is more dangerous than the military war.

Houthi movement chief, Abdul-Malik Al-Houthi, warned against the consequences of continuing to exert economic pressure on the Yemeni people to double their suffering after nine years of war.

In his latest speech on July 7, he said, "The pressure to transfer banks from Sanaa is a crazy and stupid step, and no one in the world thinks this way."

According to Al-Houthi, the Americans and the Saudis are trying to harm the Yemeni society at the economic level because they know that Yemenis largely suffer due to the economic situation.

Al-Houthi added, "We will not stand idly by in the face of the Saudi regime's insane steps or watch our people starve and their economic situation collapse."

He said he tried to send messages through all mediators and all channels to stop the transfer of banks. However, he said, they are still stalling.

Observers say the government-Houthi economic battle will likely end up in a military war, which will cause the population in Yemen a fresh cycle of suffering.