Banking experts: the need for the rehabilitation of government banks and the establishment of a deposit protection company and ensuring the rights of depositors


BAGHDAD / Rahim al-Shammari

The member of the Iraqi Council of Representatives, Dr. Mahdi Al-Hafiz to look for effective solutions to the reality of the banking sector, especially private banks in Iraq because the economic development of Aandzha but advanced banking system .. This came during a seminar hosted by the "Institute for the progress of the policies of development" to discuss the relationship between private banks and the World Bank CBI took part in the symposium elite financiers, economists and representatives of private banks experts. He said Hafiz censorship, which is supposed central bank do still weak and confused to great limits .. He pointed out that the dollar selling process by the central bank represent a sensitive issue for the citizen it is assumed that the process of converting amounts normal and easy way prevail as is prevalent in other countries. . stressing the lack of separation between what exists in the banking sector transactions and the central bank and the state of corruption in the state .. He pointed out that the decisions and orientations after 2003 was different than it is the case today, there was agreement about enabling the central bank to play a new role.

And comparisons numbers
While eating a banking expert conciliator Hassan Mahmoud through the paper presented at the symposium and the reality of the banking sector in the country and ways to promote it .. indicating that this sector is a small sector marginally to exceed its contribution to the gross domestic product of 1.5% and if we add to him the financial sector increase to 1.75% and faces the problem of the dominance of state banks to between 85-90% of the sector's assets, which hinders the development of private banks .. He explained that the annual report for financial stability for 2013 indicates that the sector's assets have reached at the end of the year a total of 208.8 trillion dinars, or about 77 0.4% of GDP estimated by the same report estimated 269.6 trillion dinars government banks share of which amounted to 187.7 trillion dinars, or slightly less than 90% in the private sector's share stood at only 21.1 trillion, about only 10% .. pointing to the meager credit relative to GDP, amounting to the cash credit of all banks in 2013 amounted to $ 23.6 trillion dinars, an increase not to exceed 8.7% (5) of the gross domestic product in 2013 compared to 55% for the countries of the Middle East and North Africa and has reached a share of banks governmental 72% while the share of the sector funds headers are only 19.5% also own the rest banks contributed to a 28% despite the fact that its share of the gross domestic product in 2013 compared to 55% for the countries of the Middle East and North Africa have amounted to government banks share of which 72% While the share of the sector funds headers are only 19.5% and the rest private banks contributed to a 28% despite the fact that its share of the sector funds capital amounting to 80.5% in.
He Mahmoud to a large disparity between the price of interest payable and receivable Interest rates on deposits ranging between 1-6% depending on the currencies and maturities in between interest rates on loans and banking facilities of all kinds between 10-15%, leaving a margin of about 9% compared to a percentage not exceeding 5% in countries Middle East and North Africa .. and this disparity between the interest payable and receivable, background historical prices began with the deflationary monetary policy adopted by the central bank to combat the sharp inflation experienced by Iraq in the period 2006- 2010, which resorted to activate the traditional instruments of monetary policy by raising policy rates to high levels close to 20% per year and raise the interest on overnight and weekly and monthly deposit rates for banks have to what Atrah between 18-20% .. as well as raising the deposit reserve to 20% instead of 15%.
He said Mahmoud to the existence of another problem facing the banking sector is faintly capital and other sources of funding, as it is still money working in Iraq banks heads together Latvian development needs, the number of operating banks is 54 banks including 7 state banks and 30 private banks of them (23) commercial banks, and (7) Islamic banks, the branches of foreign banks Fddha (17) branches .. The central bank has put limits on minimum capital operating in Iraq banks Reducing the minimum capital Bank of Iraq of non-government banks include up to 250 billion dinars, and the branches of foreign banks have started a minimum of 7 million dollars, and this recently to raise 70 million dollars.

Bank deposits and density
Said Mahmoud said the total deposits with commercial banks stood at the end of 2013 amounted to 49.8 trillion dinars, equivalent to 18.5% of GDP, of which 40.5 trillion the government banks any 81.3% and the rest is a 9.3 trillion to the private banks which 18.7% of the total deposits This discrepancy is due to the state-owned banks on government deposits dominance after that prevented the Ministry of Finance government departments and institutions to maintain accounts or deposits with private banks, but what concerns us here is the distribution of these deposits between government banks and the private banks and the total private sector deposits with the device banking for 2013 amounted to 24.45 trillion dinars, of which the share of government banks 14.61 trillion dinars, or 59.8%, while private banks received 9.83 trillion dinars at a rate of only 40.2% of private sector deposits.
He pointed to the small number of Mahmoud banking units compared to the number of population (bank density) as the number of branches reached in 1030 as a branch at the end of 2013, the branch per serving about 32 000 inhabitants.
He stressed Mahmoud on the causes of the banking sector fails to current Bhacleth due to a number of reasons, including weakness and confusion in quite a few of the instructions issued by the Central Bank from time to time and then to Ilbt be withdrawn or amends after a few days .. as well as a decline in banking supervision efficiency and professionalism but lack of seriousness. And that these methods control the banks have not kept pace with the evolution of central banks in developed countries and in neighboring countries, including preventive censorship .. In addition to a lack of the banking system to the corporate governance rules needed to monitor the performance of boards of directors and executive departments and verification of compliance with laws, regulations and instructions .. and the lack of sector of the culture of risk Banking and means of evaluation and management and ways to mitigate or reduce .. Add to this the emergence of the boards of directors and is a professional banking departments not related to nor experience nor knowledge of banking work and do not have the qualifications of non-possession of a sudden financial fortunes hovering suspicions about its sources.
He Mahmoud to a lack of the banking system of governance rules needed to monitor the performance of boards of directors and executive departments and verification of compliance with laws, regulations and instructions ... indicating that he and although there are multiple points of control talk about irregularities and corruption if begun will not end up showing that among these bodies Central Bank of Iraq - General Directorate of banking and credit control as a regulator of the activity of banks. The competent control devices and analyze budgets in the Securities Commission -balnsph banks listed on the market Audit Court, which verified the government banks accounts to the Audit Committee of the Council of Almsrv- account management compliance officer - the external auditor in each bank - oversight services and internal inspection of each bank.

Arduous and thorny task
He spoke conciliator good for dollar selling by the Central Bank of Iraq window indicating that it thorny issue relate mainly to the functions of the Iraqi Central Bank monetary stability is no stability of the dinar exchange rate against foreign currencies is one of the most important duties, and this arduous and thorny task at the same time in a matter of Kalzerv prevailing in Iraq . Iraqi Vdinar debt to the central bank and the right of the dinar bearer of this to ask the central bank disbursed the equivalent of dollars, but that this right should not be automatic and without accountability there is no doubt that Responsibility for verifying compliance with anti-money laundering law is Responsibility for both the Central Bank and the banks Commercial alike but are different related economic security of government agencies responsible for .. Indicating that other face to satisfy the demand for the dollar is the depletion of foreign reserves .. calling for a return to the manner of letters of credit to finance imports and to stop the style of bank transfers that can not be on the commercial banks and the World Bank Central knowledge sources Dnanerha while retaining the manner of remittances to pay Akiem some food commodities perishables such as meat, poultry, vegetables and fruits that are issued to Iraq periodically agreements with importers deadlines for the payment of more or less (60-90 days) .. but he also said this does not prevent meet remittances personal requests The family of legitimate documents and supports enhanced legitimacy. And this is achieved through a return to work vacations import issued by the Ministry of Commerce to be part of the documents open import credits claimed by the importer that these vacations are for statistical purposes only, without quantitative restrictions to prevent them from becoming another source of corruption.

In banking privatization
And ways to the advancement of the banking business .. Mahmoud called for raising the efficiency and professionalism of the Superintendency of Banks of strengthening the central bank's capabilities in both sides of the balance sheets of banks and testing effort analysis and commitment controls "Basel" on the one hand and tighten controls to restrict banks regimes banking and instructions on the other hand .. and militancy in violation of sanctions on the banks of the instructions and escalate their frequency in the event of bank failure to the conditions of the order are consistent with the regulations and instructions. Indicating that the commercial interest rate charged by banks is not encouraging borrowing for investment purposes prices, it must find a way to support interest rates through the use of reserve deposits held by the central bank to bank lending interest rate and not 1% per year, for example, that the banks lend to small and medium enterprises prices developmental interest 4-5% .. The second step require political will capable to take drastic action and initiate laws which will eventually lead to a move away state from interfering in the domestic banking from it and the international activity through the privatization of all of the bank "Two Rivers" and "rational" and the liquidation of Bank of Iraq Trade accordance Bakannouna in the specified time frame, according to his rights and obligations ... pointing out that the privatization of three state banks can contribute contribution is little to reduce the large budget deficit .. He pointed to the absence of an advantage and the advantage of dealing with these banks are not the only advantage is the protection that provided to the owners of deposits from the household sector and the business sector and this is what justifies its dominance of the private sector deposits.

Standards and norms
For his part, economic expert, Dr. Ahmed Alabreha occur indicating that the banking sector file in Iraq is one of the thorny issues .. After 1984 the world went to the principle of easing controls on financial institutions and continued it so, up to the recent global financial crisis and found that they sinned in easing censorship and discovered that the largest financial institutions exceeded on the bases and standards and rules of nice behavior through the files of corruption that have occurred there.
And between Alabreha that one of the most important aspects of failure in Iraq is not the government's ability to enforce the law and therefore, all witnessed by Iraq of sacrifices for freedom and democracy after 2003 as a result of the weakness of the law and the inability to impose the international reports free of classified Iraq as part of countries that enjoy democracy .. He stressed that the central bank alone is unable to impose control and assess the level of performance of the banks, this task is much greater than the bank whose primary responsibility is the ability of the fiscal policy put a non-banking supervision and the development of controls and anti-money laundering and operations of central banking.
Alabreha He pointed out that the Superintendency of Banks is the task was added to the functions of the bank which is not a banking cash and as a policy has occurred mixing a clear policy in the task led to disastrous results .. censorship needs to destinations has clout and the ability to strike with an iron fist .. He pointed out that the UN introduced Recently circle Union called for Integrity, or the fight against corruption .. and corruption here means the agent for an authentic betrayal .. The government agent and the people Thoroughbred .. and there is a new theory that the Iraqi the term (I Halih) This principle is the basis of corruption, and there are 80 international initiative to combat corruption, including the lack of dealing with bribery issue is not cursing the government but is required from citizens not to pay a bribe to the employee or borrowing from the bank and the loan Ivy ..

Market heterogeneous
So Dr. occur appearance of Mohammed Saleh financial advisor to the prime minister .. Indicating that the banking market is not homogenous, there are attracting clear of capital and deposits by government banks, which account for 90 per cent and 10 per cent for private banks and there is a disparity in the capital .. explaining that State-owned banks in Iraq late and private banks operate according to the nineteenth century Systems .. Saleh explained that the percentage of adults who get a credit of 12 per cent and with each failure of banking transaction because of tripping is withdrawn 32 treatment Banks civil very conservative in government banks is conservative and this is evident through large loans granted by government banks size .. The key point in the banking operations of illegal loans ratio goes up to 40 per cent and the meaning of this wake of the banking system is prevalent in Iraq evidenced by interest rise to up to 100 per cent and this is usury.
Saleh said the governance absent in the banking sector and of withholding data on what others result in negative governance or bad and there is a serious thing in Iraq, which is being conducted outside the budget, a domestic trade of creating centers of profit separately and the loss of any work to maximize profits personal connection goes little to The Foundation this point very dangerous ..
He spoke in favor of the currency auction file returned him an important and necessary, but can you take the creation of a bank to the private sector be Manmamh the opening credits and the centrality of the transition gradually to cover imports.

The role of banks in development
As part of the discussions that took place symposium Mr. Tariq secretary private banks Association talked about the results of the banking conference organized by the Association recently indicating that the conference recommended strengthening and developing cooperation with the Central Bank of Iraq and the formation of a joint committee of the Central Bank and Ministry of Finance and the Association of Banks and members of the economic and financial to development Indeed, the banking and strengthen cooperation with government agencies to support private banks as well as carry out an awareness campaign about the role of banks in the development and the designation of a representative of the Association Council as an adviser in the Iraqi Central Bank administration.

Wrong approach
Economic expert on behalf of Jamil Antoine expressed his appreciation for large aggressive in offering and address the problems away from the courtesy .. calling for a review of prices of bank stocks .. He added that the banking system and because of the tremors suffered and withdraw large sums from banks and some of it was not the level of responsibility led to vibration citizen's confidence in these banks, there are 77 per cent of the Iraqi currency outside banks, even if this size is present, we could finance the budget in Iraqi dinars, as well as the dollar deficit and this was the result of wrong approach for banks and lack of monitoring and follow-up and the role of registered negative companies .. He pointed to the case of lack of governance and absence of legislation in this regard and it must reconsider these standards .. stressing the need to activate the control procedures by the central bank away from the courtesies.
Participants in the symposium and called for the risks faced by banks, including the amounts deposited with the bank address (Rafidain and Rasheed) in Arbil and Sulaymaniyah reached the limits of 7 trillion dinars and the inability of branches for the disbursement of these deposits to the lack of cash is needed to address this problem .. They also called for the formation of a real committee a representative of the Central Bank and others the task of putting solutions and treatments for all the problems that have been put forward and be in front of this committee one month to issue its report without that this report be binding but is an attempt to resolve.

Views and assumptions
Dr. Ali called for a high tackle the problem of the lack of liquidity in banks and why such a problem occurs Is because of weak oversight or Tcheriei..kma also questioned the lack of experience and whether trusteeship has been successful over the Warka Bank in order to reassure the Iraqi citizen is heading towards these banks?
Legal expert Osama Mohammed Ali pointed out that economic development in the country requires action Daba and put the right man in the right place .. He pointed out some of the private banks which exceeded regulations and laws without taking the measures required right .. calling for the application of prudential standards and to issue the necessary instructions and the need to issue sanctions against violators as well as the development of an institution meant to protect the rights of depositors.
Banking expert Samir Alnasiri warned of the collapse of the banking system in Iraq soon if they are not addressing the problems faced during this year and its collapse means the collapse of the economy .. indicating that the results of research, studies and indicators do not always get the attention .. evidence that the five largest banks in Iraq saw a decline in the volume of deposits decreased cash and operating, credit, employment and profits earned money down the whole as well as lower assets and this is a serious indicators of the top five banks, how the case for other banks, adding .. If you do not address the issue of liquidity Bmsrvi Rafidain and Rasheed in the region. He called for the preparation of a new economic approach in dealing with the government appoints the reality of large and disastrous problem banks in the light of the financial crisis faced by Iraq.
Economic and media researcher Dr. Hamid Ulkipaia to talk about the privatization of State-owned banks in light of the lack of trust by the Iraqi citizen banks civil .. indicating that the lack of confidence that paid customers to trend towards government banks because people know that the government will not go bankrupt, it has a viable and therefore privatization bank Rafidain and Rasheed means to inflict these banks that enjoy the confidence of people in banks civil lost its confidence. People put their deposits in these banks and then not getting it .. He pointed out that privatization might be appropriate but then provide conditions appropriate and the environment that have not yet ripened banking sector need to organize.
Banking expert Abdul Aziz Hassoun, said the banking system that exists today is the result of the system is known and this system is not he can succeed is this device .. indicating that the deposits constitute less than a quarter of deposits in Lebanon Where are we and where to finance the Iraqi banking system which is required to support development .. adding This device remains connected to the existing situation and can not rise device is currently located.