Iraqi banks in front of the challenges of lack of liquidity loans and treasury bonds

Iraqi banks in front of the challenges of lack of liquidity loans and treasury bonds

09/21/2015 08:10

Iraqi banks in front of the challenges of lack of liquidity loans and treasury bondsThe difficult conditions in which the private banking sector is currently going through a disturbing, particularly in light of tripping that accompanies the performance of private banks, especially in relation to its ability to fulfill the rights of depositors.

BAGHDAD / Obelisk: prevailing concern of Iraqi private banks, financial liquidity as a result of the decline in the size of some of them, which led to its inability to fulfill the rights of depositors. As citizens and are interested in carrying the responsibility of those responsible, and at the forefront of the Iraqi Central Bank, not to tighten control over the banks, especially those currently lagging in the payment of deposits of citizens.

This coincides with warnings by Iraqi Minister of Communications Previously, Mohammed Tawfiq Allawi, of the danger of Treasury bonds loan from three international banks are Deutsche Bank, Citigroup, JP Morgan, by six billion dollars at an interest rate 10.37% per annum up to the year 028.

He said Allawi dangerous second in this loan is impossible to increase oil prices to previous levels, but it is forecast that it will not arrive in the best conditions to more than $ eighty per barrel because of shale oil production for the foreseeable future big possibility is the descent of oil to thirty levels dollars or even less over the next year due to an increase Iranian production during 2016.

Allawi criticized those responsible for the economic file, saying they are making decisions will make the country’s economy is collapsing without taking deliberate steps to save the country from collapse ..

“The coming year will see a significant reduction in the cash reserve and we will have to reduce the dinar or rather the collapse of the dinar, and unfortunately there is no one listens to what arises from economic solutions.”

Allawi also noted that the central bank robberies are still under way in full swing,

He said banking expert Abdul Aziz Hassoun, according to the newspaper “Life” published in London in its issue Monday, that “the difficult circumstances in which the private banking sector is currently undergoing a disturbing, particularly in light of tripping that accompanies the performance of private banks, especially in relation to its ability to fulfill the rights of depositors “.

He pointed out that “trust between the citizen and the private banks are currently difficult, and perhaps to fade when addressing this situation in the sector.” He pointed out that “the reluctance of some banks to reimburse depositors citizens, paying citizens who have accounts in other banks are financially stable and able to meet the requests for depositors, to withdraw their deposits in case of any emergency.” So he stressed that “the situation requires measures by the Central Bank of Iraq for the return of citizens’ confidence in the banks, because it is a guarantor and is responsible for its activities and its work.”

Hassoun and announced that the Iraqi private banks “have seen a remarkable development in recent years, in the exercise of all forms of banking activity and the adoption of modern systems and mechanisms.” He pointed out that “the sum of their capital in excess of $ 6 billion, but the exceptional circumstances and the deterioration of economic activity and the decline in the financial resources of the state because of the fall in world oil prices, factors cast a shadow over all sectors, in the forefront of the banking sector.”

He said that “maintaining the deposits of citizens is one of the duties of the Central Bank of Iraq, which is currently working on the completion of legislation to protect bank deposits law, which is a necessity required by the state of anxiety and fear experienced by the relationship between banks and citizens now.” The Finance Committee in the Iraqi Council of Representatives, within the framework keep pace with the subject, he explained that some people “are reluctant today to deposit their money in private and government banks, for lack of confidence in the result of past events or other currently get in a number of banks.” But that “does not mean that the banking cabin in Iraq is good or untrustworthy,” noting that “a large number of Iraqi private banks actively participated in building Iraq’s economy and support the development plans.”

He warned a report by the Reuters news agency from the deterioration of the financial problems of Iraq in the long term, following the presentation of dollar-denominated sovereign bonds in the international bond market at high interest rates to cover the deficit in the budget because of the war against Daash.

Reuters said in its report, seen by “obelisk” Iraq seems to be on his way to a successful return to the international bond market after an absence of nine years to collect billions of dollars at high interest rates may lead to a deterioration of the financial problems in the long run.

The Central Bank of Iraq put important observations on the performance of banks in inappropriate, and most recently in August (August) in a letter addressed to the banks, pointing to “refrain number of banks to pay customer deposits in the maturity dates and currency deposited therein, and forcing depositors to receive In the Iraqi dinar price less than the market price, the weaker confidence in the banking system. ” The “central” to the Iraqi “low contribution of the banking sector in the GDP amounting to 15 percent, which is much less than their counterparts in neighboring countries, requires improve this ratio through an increase in banking activity and the diversity of its services.”

The economist Muhammad Sharif Abu Mayssam, called for “a new reality takes the banks (public and private) took the initiative to finance an important part of the local demand for the currency bloc, contributing to rotate the wheel of the economy by raising credit ratios compared to the rates of deposits and the legal reserve of their deposits in The central bank coffers. ”

Urged to “live up to the role adopted by the Central on the support liquidity of commercial and specialized banks in the amount of five trillion dinars, to enable them to lend the real sectors in support of economic activity and securing employment, which came in tune with what stipulated in the general budget in Article 44, which called for the bank Central status necessary to support the government and private banks to improve their performance and enhance their liquidity plans. ”

He said Abu Mayssam that this provision “is to demand a must to oblige the central management is responsible for supporting the national economy, and protect it from the downturn in the light of the circumstances in which pass the country,” explaining that “necessity knows no law at the time only to be from the banking sector due diligence in the performance, with the aim moving the national economy and overcome the stage and reclining on monetary policy in the collection of profits. ”

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