Jordan-based Arab Bank opened its first branch in Syria on Monday, making it the fifth private-sector bank to enter the country since market reforms in the sector took effect last year.
Arab Bank Vice Chairman Mohammed Abdel Salam Heikal said the opening was "an important step in ensuring the promising potential of the Syrian economy."
The move comes in the midst of a political crisis for Syria, after a UN inquiry into the assassination of Lebanese former prime minister Rafik al-Hariri asked to interview Syrian President Bashar al-Assad and Foreign Minister Farouq al-Shara.
Syria says foreign investments surged to about $2 billion in 2005 from some $460 million in 2004.
Arab Bank is one of the oldest financial institutions in the Arab world. It opened in Syria with 1.5 billion Syrian pounds ($29 million) in capital and 51 percent ownership by Syrian investors, the state news agency SANA said.
Bankers say the Syrian banking system has a lot of growth potential as the economy opens up after 40 years of socialist planning.
The country of 18 million people has 282 bank branches, equivalent to one per 64,000 inhabitants, compared with an average of one branch per 25,000 people in the rest of the region.
The other four private sector banks that operate as joint ventures between Syrian and foreign investors are Bank of Syria and Overseas, Bemo and Bank Audi, all Beirut-based banks, as well as International Trade and Finance. Lebanon's Byblos Bank is also expected to open in Syria soon.
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