Extension of the deadline for raising capital from foreign banks operating in Iraq

17-07-2016 06:40 PM

Director General of the Department of finance and the Central Bank's credit Ihsan HostMonster yasiri, the extension of the period in which the decision to lift the capital of foreign banks operating in Iraq to $ 50 million, the first stages of capital raised to $ 25 million during a period lasting until 31 December of the current year. The second is to raise capital to 50 million dollars during the period ending on 31 December 2017.

Shammari said in a statement to Al Hayat, that the Central Bank had announced the lifting of «capital of foreign banks operating in Iraq instead of $ 50 million to 70 million, after meetings the Governor «» central relationship with a delegation of Lebanese banks earlier», pointing out that the discussion touched on the possibility of facilitating the conditions conducive to the promotion of foreign banks and specific duties, the development contribution in banking operations in the Iraqi market and increase their competitiveness with Iraqi banks To attract economic activity». He considered that the capital increase will allow for banks on Iraq, doubling its presence in the area by opening new branches and expanding lending activity and funding base.

The specified minimum capital to open a foreign bank in Iraq was $ 7 million. But the Central Bank felt that the promotion of the private sector requires foreign banks ' capital raising in the form of position to work in the market, Lebanese banks objected to the decision to raise it to $ 70 million, because the Iraqi banking market is not conducive to profitability because of security, political and economic conditions. And had applied to the Central Bank reversed its decision, but he refused, that concluded negotiations to agree on $ 50 million in two phases.

Banking expert noted Abdul Aziz Hassoun, banking law number 94 of 2004, foreign bank's Board of Directors pledge that lets at the request of the Iraqi Central Bank funds to cover obligations incurred by the branch in Iraq in its business banking».

That «one includes branches, work and be fully responsible for the overall management of financial commitments. But the law "did not address the section's capital at the time of committing the Central Bank and foreign banks to allocate $ 7 million dollars as operating capital section».

He announced that the Association of private banks in Iraq «discussed resolution», the «request section capital weakens the strength of public administration's commitment to cover all obligations of the branch, but the Central Bank raise capital to $ 75 million, and lower it again to 50 million. He said that it would increase the departmental weakness «public to foreign bank branches and clearly deviates from what materials aimed at law and may constitute legal loopholes resulting weakness in performance of obligations which exceed the limits set by the law to bypass banks in Iraq.

Despite the diversity of foreign banks and Arabic, say officials in the sector, most of them don't have big capital so confined to speculative currency auction process, to achieve quick profits reflected negatively on local market realities. They declared that the files opened for foreign banks and civil war, proved the existence of smuggling money out of the country, through daily deal with Central Bank auction.

Experts said that deposits in banks operating in Iraq whether governmental or civil war 70 trillion dinars (about 60 billion dollars), with total capital of Iraqi private banks of $ 30 million in 2004 to $ 1 billion to 600 million the end of 2014, with the exception of its Arabic and foreign bank branches operating in Iraq. As the number of private banks from 17 to 31, 2004, the end of 2014, with the number of its branches in Baghdad and the provinces to more than 800, competing in their number and level of services a bank branches