Experts: civil oblige banks to increase its capital without opening the wrong decision constraints

10/26/2013 12:00 AM

Wondered about the reasons for the failure to extend the government banks resolution
Baghdad - Mostafa Hashemi - * شكران the Fatlawi

Saw experts and specialists in economic affairs that the central bank's decision excluding the 12 banks waged from the auction sale of the currency and deprive it of cash sales , transfers and appropriations would open the door to the parallel market to emerge and the decline of the real role of banks civil serious in the search for a partnership banking with major international banks.

 While others wondered about the reason for increasing the capital of private banks and non - increase in the government counterparts despite the fact that the majority of government banks to exceed capital of 100 billion dinars.

Discrimination in dealing

In this regard, said economic expert , Dr. Majid picture that there is a distinction in dealings between private banks and government through consolidation of lack of confidence in the banking industry to the private sector , and explained that there are state banks much capital is less than 250 billion Iraqi dinars.

He said the Rafidain Bank, capitalized at 70 billion dinars, with reserves while Rasheed Bank capital of 25 billion dinars , in addition to some other government banks not to exceed two billion dinars capital .

Restrictive laws


He stressed that the size of the deposits of private banks is disproportionate to dependence and therefore increase its capital must be under realistic policy to support private banks in terms do not require all banks to be the capital of this size is constrained by laws preventing them from doing business and direct investment.

 Noting that he to ايصح direct harsh blows to banks with high rating from the central bank through this procedure.


Market Volatility


He pointed out that any decision was politically or economically would cause market instability and volatility in exchange rates , indicating that the central bank 's recent decision to exclude 12 banks waged auction of shares of currency depreciation of the local currency against the dollar.




Is thoughtful decision

For his part, adviser to the Iraqi Institute for Economic Reform , Dr. Ahmed Al - Husseini said the central bank's decision not carefully thought out than a state of confusion was born in the fluctuation of the exchange rate.

 Husseini called in a statement for the ( morning ) to give those banks another chance because each seeks to establish a banking partnership with foreign banks large and well - known in the world.

He said Chancellor told the (morning) that long امهلها the central bank in recent decision to increase the capital of private banks which four months is sufficient to achieve the increase as well as the presence of articles 27 and 28 of the Banking Act , which Takidan the work of those banks and prevent them from doing business banking truth Kalancth various trade and investments , which contribute significantly to increase their capital .


Penalties for banks


He noted that the current leadership of the central bank began moving to take sanctions against banks more direction in helping them to enter and participate in the process of economic development and take a real role in the economy .




Stocks decline

He noted that the shares of these banks and their reputation in the stock market will drop what is causing the low price of its shares if they learned that the banking sector is one of the largest economic sectors heavily traded stock , and therefore, the decision in this format سيضربها at heart while the country needs great efforts in the development of the private banking sector and the establishment of offshore banking partnerships to attract foreign investment.

He pointed out that the parallel market , including banking companies and financial Alostat will appear in a stronger into existence exercised pursuant to tell him where in addition to it is not yet known to the public such as banks civil .

For his part in the affairs adviser said Finance Mazen dear : that the process of raising capital of banks is not the solution best suited because raising capital burdening shareholders often difficult to take advantage of this method.

 Pointing out that the profits banks will decrease headed increase capital due to limited banking products derived from the paragraphs of the Banking Act .

He believes that the issue of integration of banks with sheets weak financial is also an extensive line due to a variation in the ideas and boards of directors and private shareholders major proposed solution optimally to get to achieve the goals of the banking sector through the formation of companies with foreign banks as a result its holdings of experience banks can acquire a voluntary basis as well as the application of electronic systems the correct destination .

The repeal of Article 28 of the Banking Act

The banking expert Muhannad Qassim al-Saadi said: Banking Act formulas quickly in the era of Bremer has been used terminology and labels curious about Iraqi law where you do not know its meaning in addition to that this law does not meet the aspirations of the Iraqi banks because it is in the hands of Iraqi banks.

Stressed Saadi that in order to to establish private commercial banking institution must have its own money any money contributors pointing to the need not state's contribution to any part of the capital , noting that the general principle of this banking institution is a partnership and the company know the law Iraqi agreement bodyguards or more to participate draft commercial and sharing Maintg him Profit permission aim to make a profit but he also said that the current banking law under Maitalq the required profits and specifically Article 28 of the banking Act , which preceded Article 27 , which identified a range of activities that is possible to exercise and did not remember all the activities , but part of it.

He pointed out that Article 28 prevented banks from Mmarssh activities within the core of the banking business is investment as well as to prevent any activity that is not listed in Article 27 , but after taking the approval of the Central Bank of surprise from the central bank when addressing to take the approval of the activity that is not mentioned in the article 27 , which reads as follows " bring the banks to exercise any activity not mentioned in this article ," What made ​​us tied up in the vortex of the exercise of a particular aspect of the banking business and lack of exercise second aspect of a proposed solution which modify the wording of Article 27 and the abolition of Article 28 whole by legal experts, bankers Iraqis and managers banks.


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