US sub-prime crisis hits Algeria

President Abdelaziz Bouteflika wants to overhaul the banking system

Algeria has suspended the first ever privatisation of a bank in the North African nation due to continuing troubles in global financial markets.

A number of business deals have come unhinged in recent weeks as the cost of borrowing money has risen due to problems in the US housing market.

Algeria was planning to auction off 51% of Credit Populaire d'Algerie.

The finance ministry said that the sale would resume when the "impact of the mortgage crisis" became clearer.

Bids were expected to have opened this week with the landmark privatisation wrapped up by the end of the year.

The delay is the first sign that the US housing woes have reached Northern Africa.

The decision to temporarily halt the sale follows three of the six banks on the bidding short-list dropping out of the race, including US giant Citigroup, Spain's Santander and France's Credit Agricole.

"Most of them need to evaluate their situation but I think they will come back to take part," said Fatiha Mentouri, Algeria's deputy finance minister.

Of the remaining contenders, French bank Natexis announced over the weekend that it would have to book losses of 407 million euros ($604m) in relation to investments linked to worthless US home loans.

The planned privatisation was meant to have been part of the oil rich country's drive to reform its banking sector, which is 95% controlled by the state, and help attract investment to fund infrastructure growth.