Iraq Banking News: JPMorgan Deepens Iraq Business After Citi, Standard

Chartered
Posted on July 8, 2013


JPMorgan Chase & Co. (JPM) is the latest international bank after
Citigroup Inc. (C) andStandard Chartered Plc (STAN) to expand business
in Iraq as OPEC?s second-largest producer boosts crude oil output and
rebuilds its economy.

JPMorgan signed a one-year agreement yesterday to help the Trade Bank
of Iraq finance imports of goods and services, John Gibbons, managing
director and EMEA regional executive for the New York-based bank, said
in an interview in Baghdad.

?Our focus is to open more letters of credit through the Trade Bank of
Iraq on behalf of the government and its ministries,? he said.

Iraq, with the world?s fifth-largest proven oil reserves, is
modernizing its infrastructure and energy industry after decades of
sanctions, war and neglect. It produced 3.2 million barrels a day of
crude in June, according to data compiled by Bloomberg, and targets
output of 3.5 million barrels by the end of the year.

The government is boosting spending by 18 percent in 2013 to $118 billion, and the
International Monetary Fund forecasts an annual economic growth rate
of 9 percent, the fastest after Libya among 18 countries in the region.
Iraqi officials are in talks with international banks about the
opening of offices and branches in the country, Abdul-Basit Turki,
acting governor of Iraq?s central bank, said today in an interview in
Baghdad. ?It is a rich market and the investment opportunities are
huge,? Turki said.

Banking Growth

Foreign banks were barred from the country until after the 2003
U.S.-led invasion ousted the government of Saddam Hussein. Today, 15
international banks operate in Iraq, competing with seven state banks,
23 private lenders and nine banks operating under Islamic rules,
according to the central bank?s website.

Citigroup plans to open representative offices and branches in Baghdad
and the cities of Basra and Erbil to benefit from an estimated $1
trillion of infrastructure spending, Mayank Malik, the U.S. bank?s
chief executive officer for Jordan, Iraq, Syria and the Palestinian
territories, said in a June 27 interview.

 The lender is among
international banks seeking to finance a pipeline to export Iraqi oil
and natural gas through Jordan, Nateq Balasem Khalaf, deputy director
general of Iraq?s State Company for Oil Projects, said July 4.
Standard Chartered has said it will open branches this year in Baghdad
and Erbil, followed by a third office next year in Basra, a southern
oil hub.

Import Payments
The agreement with JPMorgan will help the Trade Bank of Iraq ?open
more letters of credit that we?re in need of,? TBI chairman and
president Hamdiyah Al Jaff said in an interview in Baghdad yesterday.

JPMorgan helped set up TBI, the country?s largest bank for trade
finance, to facilitate imports needed for Iraq?s postwar reconstruction.

Banks in the country are set for growth in earnings and assets as a
surge in lending in Iraq outpaces much of the Middle East, according
to Singapore-based Sansar Capital Management LLC, which runs a fund
with $30 million invested in Iraqi equities.

Iraq?s rising oil exports and a drop in the prime lending rate to 6
percent from 17 percent in 2008 are feeding the expansion. The five
largest privately owned banks boosted their combined net income by 207
percent from 2010 to 2012 and more than doubled earnings per share.

Iraq?s stock exchange drew investors in February when mobile operator
Asiacell Communications PJSC listed after a $1.3 billion share sale,
in the Middle East?s biggest initial public offering since 2008.

 The country?s two other mobile operators, Zain Iraq and Korek Telecom,
plan to sell shares in IPOs to comply with their license requirements.
Iraq is the biggest oil producer, after Saudi Arabia, in the
Organization of Petroleum Exporting Countries.

Source: Bloomberg



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