Beginnings polarization

Published 09/09/2012 12:00 AM


Iraqi banking sector

Do you entered the banking sector in Iraq stage attract foreign capital and thus phase of modernization and development? The answer is 'yes' if it is 'yes' shy until now, because the big financial firms and international banks looking to Baghdad as a promising station in investment aspirations.

How can preview this shift?

Outlines of this polarization began to emerge as she heads to the growing accelerated rhythms, and the Iraqi banking system, which saw a break to keep pace with global banking developments become more equipped to provide comprehensive banking services through cooperation and interaction with regional and international expertise.

In this context, the banking community welcomed the approval of the Iraqi Central Bank to buy Qatari bank to half the shares «Mansour Al-Ahli Bank, describing the move as good as it helps Mansour to develop his business State Kalhawwalat and instruments. And the entry of Qatari bank in partnership with Mansour will help recruit the bank's operations Foreign Kalhawwalat and exchange instruments, which serves as external support, note that there are negotiations between the Iraqi private banks and international banks to enter into a similar partnership, and the coming period will witness the announcement of the entry international banks in the case of coordination with Iraqi banks with their own money and banking performance.

Same circles explained that this initiative constitutes an incentive for private banks to negotiate with the Arab and international banks for the development of banking, in addition to the transfer of modern technology to the Iraqi banking sector, and for the necessary expertise.

The Arab banks and European and American has announced its desire to open branches in Iraq in the coming period, also considered director of government banks in the Ministry of Finance Hilal Taan entry of international banks Iraq by opening branches, the mutually profitable, because the market for investment in Iraq need to huge capital in foreign banks and which aspires to achieve profits.

He quoted Taan as saying in a press statement that the banking sector in Iraq is unable to cope with the fact investment witnessed economic sectors, it is necessary entry of international banks Iraqi market, as has huge capital that would promote projects large, as well as create competition with Iraqi banks and helping to train Iraqi cadres in and called on the government to the need to pass legislation to protect the legal these banks as well as tax breaks.

Meanwhile, a banking expert as Abdul Hadi in a press statement that the Central Bank Law is the new catalyst core to attract capital world, noting that the presence of the Arab banking sector and foreign investment in Iraq supports national experiences to a large extent, through the transfer of technology advanced banking to local banks.

Abdul Hadi added that the Iraqi banking system witnessed significant outage to keep pace with the global development cause a kind of confusion in the performance, and must be instructed by the central bank provides direct banks towards investment, in addition to the adoption of methods of long-term credit.

For his part, financial expert was quoted Farouk Ramadan as saying that the work of international banks in Iraq is a clear indication of the strength of the Iraqi economy. Ramadan added that the cash reserve achieved by the central bank and $ 60 billion, has not been achieved in the history of Iraq, in addition to serious decisions bank in terms of increasing capital of banks which have had a significant impact on the direction of international banks towards Iraq.

The renowned experts have confirmed in more than one occasion that the economic crisis and recession witnessed by some European countries in the recent period, and the need for Iraq to construction and reconstruction and investment projects, are all factors that have made ​​international banks are racing to open branches, seeking a role in financing projects and to benefit from Profits, meanwhile is bring global experience to the Iraqi banking sector, which leads to the development and advancement in various fields.

He explained these experts that Iraq has elements of great economic represented in metals extractive oil and gas and phosphate, as well as the investment environment fertile that it lacks most of the world, prompting investment companies to invest, especially as the global banks started to open branches in Baghdad and the provinces.

He drew an economist Bassem Jamil Antoine that the world live in a state of saturation for the project services and construction, and economic stagnation, with Iraq, and because of wars and blockades, in the nineties of the last century meets the urgent need to infrastructure and health services and projects of processing power, making the eyes companies and international banks are moving him out of the global economic crisis.

The Abu Dhabi Islamic Bank and Lebanese banks and Kuwaiti recently announced the opening of branches in Baghdad and the provinces.

Furthermore, welcomed the Executive Director of the Association of Iraqi private banks Abdul Aziz Hassoun said in remarks to «weekly» opened its first bank Emirates Islamic in Iraq, and said: that this step will help the Gulf to invest in Iraq, in addition to benefiting the Iraqi banking sector of technological expertise, which has Gulf banks, and the banking sector in the United Arab Emirates, is ahead in this area.

An official source in Abu Dhabi Islamic Bank has made ​​clear that the bank is looking forward to the presence in the broadest and largest in the Gulf region, through the launch of its first branch in Iraq, to be the first financial institution based in the United Arab Emirates get a license to offer banking operations integrated from the central bank Iraqi.

The supply the Iraqi banking sector modern technology is an urgent need at the moment to boost investment in Iraq forward, because today's investor needs a modern banking system, so his money away from potential risks. The banking sector also plays a key role in attracting investors, on the condition that has required specifications are available to perform sophisticated.

It is worth mentioning that the Iraqi parliament approved in October (October) 2006 investment law, which was said at the time it would open the doors to foreign investment, for providing a lot of facilities to foreign investors.

But many foreign companies are still hesitant because of fear of actually unstable security in addition to that the law did not give investors the right ownership of the property for the project has equated the Iraqi investors and foreign in all privileges except real estate ownership, as it can be for foreign investors to rent land for a period of 50 years renewable according to paragraph 11 of the law.

BAGHDAD - Samer Ibrahim
Bank for every 50 thousand Iraqis

Adviser to the CBI the appearance of Mohammed Saleh expressed his support for the idea of the merger of weak banks and small and describing it a good idea that will help to build a banking entity with strong management.

Saleh also said that bank mergers between two weak banks enhance the power of the banks, but this situation be within certain conditions and data. He explained: in exceptional cases the weak banks to merge in order to ensure continued operation of banking without loss.

The central bank adviser said that the integration of great importance in banks gathered strength in the form of an institution with high literal based governance to manage, what serves the financial stability and act in accordance with the competitive market system to provide better services to citizens.

It consists Iraqi banking system of 32 private banks, including 9 Islamic banks and the rest commercial banks, in addition to 7 state banks commercial and specialized, with 10 branches of foreign banks totaled branches more than 900 branch of which 503 branches of domestic banks scattered in parts of Iraq, as there seven posts of foreign banks and Jordanian, Kuwaiti and British capital of Iraqi private banks, and participation rates ranging between 49 percent and 85 percent of the capital.

The report of the Central Bank of Iraq that the balance of the total assets of the banking sector of Iraq at the end of the year 2010 amounted to about 363.3 trillion dinars, the equivalent of 310 billion dollars, and this means that the sector in third place after Arab Emirates and Saudi Arabia.

The Iraqi bank deposits about 1.3 percent of the total assets of the Arab banking sector, as it contributes about 8.7 percent of GDP. Dominated by State-owned banks Rafidain and Rasheed and Trade Bank of Iraq in a manner more than 90 percent of the Iraqi banking sector assets, compared to 10 percent for private banks.

The bank notes low density amounting to one bank for every 50 thousand people, while the percentages are global banking for every 10 thousand people which underlines the need to increase the number of banks and increasing banking spread throughout Iraq and the provision of specialized cadres.


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IBCR Report 2011




http://www.ey.com/Publication/vwLUAssets/IBCR_Report/$FILE/IBCRReport2011%28LR%29%20Final.pdf

Perspectives on Iraq's Private Banks



http://www.iraq-businessnews.com/pdf/Perspectives-on-Iraqs-Private-Banks.pdf?d9c344

The role of governance in financial market reform

Berlin-downloads
Date posted 01/07/2012 12:00 AM
Study in Berlin Summit

The strengthening of the role of corporate governance in the financial market reform, along with a sample of Iraqi banks, both nemesis Summit Bank Arabic international 2012 which ended in Berlin (Germany) in late June.



Participants in the Summit organized by the Arabic Bank Union and participated in delegations representing Arabic and global banks and paying special attention to experts study by Dr. Sadeq Rashid Al-shammari, Managing Director of the Islamic National Bank and a member of the International Federation of Arab bankers, as they deal with the Arab banking sector and the economic and financial crisis affecting the sector at the global level, and bring banks Arabic measures to fortify against its aftermath.

Study concludes an important point is that the serious economic and financial developments taking place in the world and rapid, in depth in the economies of many States and have cast a shadow over the future of the international economy and, at the same time was devoted to the concept of globalization that has spread at all levels, funding, administrative, productive and financial, as numerous types and areas of application.

He says Shammari said the developments and changes and the implications of globalization left-reaching consequences for the banking sector in the countries of the world, including Arab countries, especially in relation to the growing trends towards deregulation and the removal of obstacles legislative and regulatory prevent the expansion of these institutions in their various activities, especially in the framework of the Convention World Trading imposed a lot of obligations on States in this area,

pointing out that most economists and politicians have been busy for four years before the effects of the disastrous financial crisis that brought the impact of the collapse of the «Lehman Brother» and the consequences that resulted from the collapse, which still continues, affecting large segments .

On the economic front, for example, decline in the rate of economic growth in the world significantly to low levels, especially in the countries of Europe, while able to developing countries including Arab countries achieve the levels of good growth compared to European countries, albeit at levels less than it was before the crisis, because of financial surpluses accumulated proceeds from the sale of oil.

It is noted Shammari in the study that the global financial crisis have left devastating consequences, especially in the financial sector did in the sector since the Depression in 1929, since this crisis resulted in imbalances at the economic, social and political as the impact on the environment of the global economy, and led eventually to the disruption of a large in the commercial and financial transactions.

With regard to Iraqi banks, the study concludes that while Al-shammari, the depth of the historical development of the banking sector due to its infancy the 1920s, however, the role of private banks in particular Iraqi banks remains very limited, for financial reform in Iraq has seen remarkable developments related to the strengthening and enhancement of its role and the governance of the banks have not seen her presence not only in terms of depth of understanding and applying appropriate practices, for strengthening the financial market.

Andrew believes that the governance of banks means many things to many people, as it is an important subject and vital in the process of providing prevention against corruption and mismanagement, and at the same time to promote the values of the free market economy to the growing number of corporate shareholders and lenders.

The study included an important aspect, which topped the discussions of the summit of the bank doors, and several chapters on the importance and objectives of the reform of corporate governance of banks in the financial market as well as an overview of the emergence and development of the Iraqi banking system between year 1934 and 2012.

And stop a door at the Iraqi private banks that have been developed a broad program of activity leading what is in the promotion of interest in the subject of corporate governance of banks and financial institutions for his role in the promotion of free market economy and the prevention of corruption and poor governance, transparency and disclosure and the application of governance mechanisms internal, especially that of governance are necessary and inherent to financial activity in the world

It said: The Iraqi banks current are governed by the need for methods and formulas to avoid the dangers of credit properly and adhere to international standards, which is essential for the health of the economy, so that the reality of private banks, although its development and increase in number, refers to the lack of knowledge Balyatea with many banks, as well as the absence of the strategic dimension of management orientation to avoid the dangers banking, so the Iraqi banks are called upon to make extraordinary efforts to build capacity and provide new technologies, and development of payment systems and control, which will lead to increase profitability and reduce the proportion of bad debts.

Shammari also points to the importance of developing human resources for the sector and the provision of professional staff required for the development of the banking industry for the next stage.

Al-shammari was presented in his statements by Iraqi banks Association on several banks until June 2011 and is 49 banks broken down as follows:

1-32 of 9 communal banks Islamic banks and the rest commercial banks, in addition to Government and commercial banks 7 specialist with 10 branches of foreign banks and their subsidiaries totalling over 900 of which 503 branches of branch banks throughout the country eligibility

2. seven shares of foreign banks (Jordanian and Kuwaiti and Gulf and British) in the capital, Iraqi banks and participation rates ranging from 49 percent and 85 percent of the capital.

3. the balance of the total assets of the Iraqi banking sector at the end of the year 2010 about of 363, 3 trillion dinars, the equivalent of 310 billion dollars by the Central Bank of Iraq, compared with $ 285.6 billion at the end of the year 2009 and the growth rate of approximately 8.8 percent and ranks third after Saudi Arabia and the Arab Emirates and constitute about 13 percent quota share of the total assets of the banking sector and contribute to the rate of 8.7 percent of GDP.

4. the Government is dominated by banks, (Mesopotamia, Rashid, the Iraqi bank of Commerce) more than 90 percent of the assets of the Iraqi banking system versus 10 percent for private banks.

5. total deposits of banking sector 34, 1 trillion dinars, the equivalent of 29 billion dollars at the end of the year 2010, dominated by State-owned banks to the largest share of up to about 89 percent of the total deposits in the country.

6. Notes reduced banking density of one bank for every 50,000 while global banking density is 10,000/bank branch, which emphasizes the need to increase the number of banks and increasing the number of banking deployment across Iraq and the provision of specialized human resources.

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