Raise funds to extend the foreign banks operating in the capital of Iraq deadline

Raise funds to extend the foreign banks operating in the capital of Iraq deadline

17-07-2016 06:40 PM

Raise funds to extend the foreign banks operating in the capital of Iraq deadlineOrbit News –

The Director General of the Department of banking and credit in the central bank Ihsan Shomran Yasiri, the extension of the period under which implements the decision to raise the foreign banks operating in Iraq’s capital to $ 50 million, the first to raise capital to $ 25 million in two phases over a period will last until December 31 (December) of the current year. The second raise capital to $ 50 million during the period ending on December 31 of 2017.

He said al-Shammari said in a statement to «life», the Central Bank of Iraq was «announced the decision to raise the capital of foreign banks operating in Iraq to $ 50 million instead of 70 million, after the meetings of the governor« Central »on the Keywords with a delegation representing the Lebanese banks at a time former », pointing out that« the discussion touched on the possibility of facilitating the conditions to help the advancement of the duties of the Lebanese and foreign banks specifically, in contributing to the development of banking operations in the Iraqi market and to increase its ability to compete with the Iraqi banks in attracting economic activity size ». He added that «the capital increase will allow the banks concerned to double its presence in the area of ​​Iraq, by opening new branches and expand its lending and funding base.»

The minimum capital exact money to open a foreign bank in Iraq was $ 7 million. But the central bank felt that the advancement of the sector requires the lifting of foreign banks’ capital in the form of position to work in the market, and intercepted a Lebanese banks on the decision to lift it to $ 70 million, because the Iraqi banking market is not conducive to profitability because of the security, political and economic conditions. And it has applied to the central bank falls for his decision, but he refused, until the conclusion of negotiations to agree on an amount of $ 50 million in two phases.

He pointed banking expert Abdul Aziz Hassoun, that the Banking Act No. 94 of 2004, the Council pledged to ensure the foreign bank’s management, which allows building on the CBI request for funds to cover the obligations they impose on the branch in Iraq to exercise its banking ».

He explained that «includes one type of branches, which carry out work on its public administration and be fully responsible for financial commitments». But it pointed out that the law «does not mention private capital branch at the time of the Iraqi Central Bank foreign banks committed to allocate the amount of seven million dollars as head of operating money for the branch.»

He announced that the Association of private banks in Iraq «discussed the decision», and warned that «capital request of section greatly weaken the strength of the commitment of its public administration responsibility to cover all the branch’s obligations, but the Iraqi Central Bank to raise capital to $ 75 million, and reduced again to 50 million ». He said that it «will increase the vulnerability of public administrations commitments for branches of foreign banks and deviates from what is clearly aimed at the articles of the law, and perhaps the legal loopholes created by the weakness in the performance of obligations that exceed the limits set by the law for banks licensed in Iraq.»

Despite the diversity of Arab and foreign banks, officials in the sector saw, most of them do not have much capital, so work is limited on speculation in the currency auction process, to achieve quick profits will reflect negatively on the reality of the local market. They declared that the files opened and owned by foreign and private banks, proved the existence of smuggling money out of the country, through daily deal with the central bank auction.

According to experts, the deposits in the operating banks in Iraq, whether governmental or civil amounting to 70 trillion dinars (about US $ 60 billion), while the total of Iraqi private banks’ capital increased from $ 30 million in 2004 to one billion and 600 million end of 2014, except as branches owned by Arab and foreign banks operating in Iraq. The number of private banks from 17 in 2004 also increased to 31 the end of 2014, while the number of its branches in Baghdad and the provinces has increased to more than 800, to compete in the number and level of services bank branches «Iraq» and «rational» government.