Banking integration is one of the pillars of the advancement of the banking sector


In the last monthly meeting of the banking leaders with the governor and officials of the Central Bank, stressed the sovereignty of the expectations of the continuation of the exchange rate and the recovery of the Iraqi dinar and this goal will remain one of the central bank's basic objectives, which requires banks sooner or later leave the total dependence on the window selling foreign currency and Time to move on to the practice of real banking which is to provide modern banking products to the public and provide the best services to customers and work to increase the proportion of financial coverage. And that the banking sector has a key role in the development and revitalization of the economic cycle. He pointed out that the stability of the exchange rate should not make banks fear for their future in the banking market and should begin by practicing their banking activities regardless of the existence of the window or stop it. Which is to be addressed by the Governor and what we should address here is the suffering of the Iraqi banking sector, in particular the private banking sector (private) of the aggravation of its problems and inflation because of the shocks of economic and security suffered by Iraq during the years (2015-2017) And thus led to the weakness and suspension of the economic cycle in the country, which was the weakness in the financial banking activity, its clear implications on the macroeconomic movement if not find solutions to effective and rapid all the repercussions and economic challenges in addition to the adoption of most of the For banks on the window selling foreign currency in the receipt of their revenues and through the study and analysis of the reality and the reasons and expected results during 2018


The study and analysis of the results of the private banks in light of their official financial indicators in 2017 compared to last year, we note the decline in its financing and investment in the service of the national economy through the weakness of its contribution to GDP, which amounted to 16% cash credit to GDP and the continuation of deposits and assets at the same rates Compared with the government banks as well as the decline of shares in the Iraqi market for securities by (50% - 75%), which involved the work of banks in providing the best services to citizens, so there must be quick and radical solutions to promote private banks and their development


We believe that one of the important and fundamental solutions to overcome the problems of the Iraqi banking sector, which is currently faced by most private banks, is to seriously consider the direction to study and analyze the results of business and financial indicators of the Iraqi banking sector and evaluate and classify it according to international standards by international companies specialized as other countries and focus on the assessment on deposits, Financial, capital and reserves, revenues of internal and external banking operations, realized profits and more importantly the economic expectations of the continued repercussions of the financial crisis experienced by the country in light of the changes and Global economic fluctuations based on the involvement of banking experts in the private sector and benefit from their experience and the World Bank reports on the overall financial situation in Iraq to come out of the outcome of the decisions important to the development of the Iraqi banking sector and one of the first solutions


Classification of banks to three levels


First: Large banks, their financial position and their financial and financial position are good.


Second: Medium-sized banks, their position and their financial position are medium and capable of developing.


Third: It includes banks that suffer from weakness in their banking activity and the drop in liquidity rates


After the announcement of the results of the assessment, the Central Bank shall notify the third-ranked banks of optional merger in agreement with another bank or more of the same rank in accordance with Article 150 of the Companies Registration Law No. 21 of 1997 and within a period not exceeding the first half of this year. Compelling these banks to compulsory integration and in both cases must be defined concepts and procedures for the integration of banking as follows:


1. Definition of banking integration


(A decision of the Central Bank) and dissolve it in a single banking entity and that the new entity has the ability and effectiveness to achieve the goals of integrated bankers and the objectives of monetary policy and the national economy.


2 - Types of banking integration


(A) Optional (friendly) integration


This kind of merger is done by agreement and the will of one or more bankers matches after negotiations and agreements between the board of directors and the public bodies of the two banks or more after the economic feasibility study in all respects and what the new entity will achieve with all the obligations and obligations of previous customers.


B. Compulsory (compulsory)


This is done by issuing a decision from the Monetary Authority (Central Bank) after reaching full conviction that the target bank is faltering and in order to preserve it from imposing or liquidating it for the purpose of preserving the shareholders' rights and the extraordinary circumstance experienced by the Iraqi economy. With the help of the monetary authority to provide incentives to the troubled bank such as tax exemptions and grant aid loans in return for clear and specific guarantees.


3. For the purpose of success of the process of banking integration requires:


Provide data and information in accordance with the principle of disclosure and transparency of each of the banks involved in the merger


B) Feasibility study and expected results at the time of merger. These studies shall be evaluated by the Monetary Authority before the merger decision is taken.


4 - to carry out financial and administrative structure of the target banks before the merger process and identify the technical and administrative manpower needed to manage the new entity.


5 - The banking mergers if carried out in accordance with the above will achieve the following:


A - Increase the capacity of the new bank to activate its banking activities in all areas, most notably the rise in capital and revenues of banking operations and financial center.


B - Increase the net profits that result in increasing the value of its shares in the stock exchange and increase deposits and increase the number of customers and increase the number of depositors and thus enhance confidence, which is the most important thing in banking.


C- The new bank's commitment to fulfill all its previous obligations towards financial institutions and customers.


* Economic and banking consultant

Article Credit: Economy-news.net (Special Thanks to Charles Bright)