Iraq between its need for foreign banks and forcing it to escape procedures paid
Iraq between its need for foreign banks and forcing it to escape procedures paid
MAY 19, 2015
At a time when it decided the Iraqi Central Bank, in an unprecedented move, lending sector and civil government banks the amount of five billion dollars, the aim of the Department of Economic urgent that and enable advancement, tough measures imposed on branches of foreign banks to double their capital ten times from $ 7 million to 70 taken million dollars for each branch, and in an effort to limit foreign domestic banks competition, as well as take advantage of the large difference in employment in projects inside Iraq.
But interesting that the Iraqi Central Bank action came in light of the continued military operations, which include large areas of Iraq to fight terrorism against al “Daash”, and the resulting cut communication between the regions and the displacement of a large number of displaced people to safer areas, and the decline in commercial traffic and economic stagnation, and thus a significant decline in the banking activity and the work of the overall banking, as well as a large number of customers were exposed to losses large, most of them refused to pay their dues because of their inability to repay bank debt, which is alarming because of the deteriorating security situation and the inability of banks to prosecute defaulters pay, noting that some of these debts are not only stalled, but exceeded it to put “is payable “, experts of the Central Bank and calls for an extensive rescue of the banking sector plan in particular, and for the various sectors of the Iraqi economy in general.
and left the Central Bank of Iraq procedures resentment among Arab banks and especially the Lebanese working in Iraq, and popped her complaint from the specific implementation deadline Palace, which is in two phases: the first Visit the capital of each branch of the 7 million to $ 35 million before the end of June next, and then to 70 million by the end of this year, which is sufficient time for the completion of the financial increase arrangements, and asked banks to extend the deadline for three years, and unlink the capital of foreign banks by 30 percent of the Iraqi capital of commercial banks, because this is necessary to link up with each capital increase decided by the Iraqi banks. She stressed Lebanese banks fears of the danger of instability in the banking legislation, as issued by the Iraqi authorities, decisions and legislation at an accelerated pace, imposes on foreign banks to change their policies more than once per year, and some Lebanese banks may face criticism to the Iraqi authorities after the imposition progress collateral against Advances, knowing that the laws prohibit foreign ownership, which means that any credit in exchange for a mortgage, does not allow the bank to recover the property in case of default.
If the Iraqi central bank measures aimed to increase the activity of foreign banks operating in Iraq and raise the competition between them and the banks local, some Lebanese banks departments expressed concerns about negative repercussions of these actions can drive Arab and foreign banks to get out of the Iraqi market, knowing that in the event of failure of the foreign bank concerned about raising his own money to the required level, do not stay in front of him but the closure of its branch and liquidated .
but keen to continued activity of Lebanese banks in Iraq, I asked the Association of Banks in Lebanon’s central bank governor Riad Salameh coordination with the Central Bank of Iraq for amendments to these measures help to facilitate their implementation by Lebanese banks.
have already CBI in 2008, that the granting of licenses under Law No. 94 to more than 18 foreign banks to operate in Iraq, as part of the government’s policy in opening up the banking sector to foreign investment, including nine Lebanese banks, five banks, Turkish, two banks Iranians, and the Bank of UAE is Abu Dhabi Islamic Bank , in addition to the bank, “Citibank” and “Standard Chartered” British.
After Iraq out of Chapter VII of the United Nations, which imposed sanctions UN following the invasion of Kuwait, expressed Arab and foreign banks willingness to open branches in Iraq, has this desire has been welcomed widely in Iraq’s economic circles for several reasons, including:
First: will these banks in advance of the Iraqi economy and the advancement of the banking sector, particularly as it has a good services will gain the confidence of the Iraqi citizen.
Second, the Iraqi banking sector has not kept pace with global development, and Iraq, most in need of the entry of foreign banks high-level and dealing with modern technology, encourage individual Iraqi to deposit his money in, and it would pay Iraqi banks to promote their betterment and emulate them, but it will not reach the level of its rival.
There are in Iraq, 55 banks and 49 financial and investment institution, and including 18 banks Arab and foreign, and the testimony of Union of Arab Banks, the Iraqi banking sector activities has evolved leaps quality through the years (2003 -2014), despite the complex conditions experienced by Iraq in various fields and the economic ones in particular, where the financial statements of the results of the Year 2013 indicate, compared with the previous years, particularly in 2011, as a basis, to get a clear growth rates in assets 33% range, and capital 47.5%, and credit the cash given to 60%, and deposits 1.6% (excluding deposits of the central government deposits with commercial nature).
Based on the bank reports , net profit achieved by commercial banks $ 1.3 billion in 2014, of which 56% in favor of the government banks.
is no doubt that the number of banks in Iraq is not consistent with the population, and highlights the failure of the Iraqi people to resort to the banking business, in that The population is estimated at 35 million people, of whom 80% do not have a bank account, and there are 900 bank branch based geographically in the provincial capitals and some major cities, and the data indicate that the branch per serving about 45 thousand people in Iraq, compared to Lebanon, which serves as each branch Four thousand people.
In this regard, it must be pointed to the existence of distortions structural in the Iraqi banking sector, including that of government banks and number seven banks control 90% of the sector’s assets, leaving only 10% to about 48 banks in the private sector, not only State-owned banks deposits of the public sector, but controls 63% of private sector deposits, complaining of private banks from the government, which favors to its banks in financial activity restrictions, as well as state administrations refusal to accept instruments worth more than 25 million dinars, and drawn on the private sector banks to pay any amounts due to these departments, and accounted instruments issued by government banks, and the most important difficulties faced by most of the banks inability to recover loans from debtors, but could not be recovery in most cases, even if the bank profit a judicial decision to sell collateral, and for reasons of the security situation and social pressures .
According to the Association of private banks report, the banks development plan are concentrated in two main areas:
first, focused on building infrastructure for the banking sector under the direct supervision by the central bank, by amending legislation, especially Law No. 94 of 2004, which regulates the work of banks, and other laws related, such as corporate law, tax law, and the law against money laundering, and to pass a law for Islamic banks.
II: The efforts of banks in the development and the development of plans, with a focus on the use of modern technology in the banking business.
The Central Bank of Iraq hopes to be the infrastructure of the device Banking prepared in the first half of 2015, to receive all the latest and advanced services in another banking applications in the world, but it seems that the absence of security and political stability and the continuation of military operations, did not allow the achievement of this goal.