Joumhouriya (Republic), Libya's biggest state-owned bank by assets, has capital of more than 1 billion dinars ($769.2 million) after merging with another bank, Al Oumma (Nation) Bank. The merger with Al Oumma, the fifth-largest state-owned bank, created an entity with combined assets of $6.5 billion, and the government has appointed advisers

to help improve the bank's operations.

Central bank head, Farhat Omar Bin Guidara, said the sale would take place soon but did not give a date.

Libya said last June it planned to sell stakes in Joumhouriya and National Commercial Bank after selling holdings in two banks to foreign lenders in 2007 and in early 2008.

Financial authorities have paused before more privatisations to assess the impact of the first foreign banks in the country in more than three decades.

Foreign investors have begun returning to Libya as it emerges from years of sanctions imposed by the West.

Guidara said Libya planned to give licences for foreign banks to launch next year, either alone or in partnership with Libyan investors.

"Now we are working on conditions and standards to grant licences," he said. "We are working also on the number of licences that might be granted to foreign banks."

He said the aim would be to allow competition without harming Libya's banking sector.

The government is struggling to reform a highly centralised banking system which is seen widely as an obstacle to private investment and growth in a country where oil still dominates the economy. (Reuters)