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Foreign banks in Kurdistan soon
2.11.2006
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Newsdesk,
November 2, -- The central bank of Iraq is
considering licensing several foreign banks to
operate within the country, mostly in the safe
semi-autonomous region of Kurdistan, Sinan Al
Shabibi, the bank's governor, said yesterday.
"There have been some applications to operate in
northern region of Kurdistan, but their eyes are on
Baghdad eventually," Al Shabibi told Zawya Dow Jones
in an interview.
Al Shabibi said that the bank is considering several
Turkish and Lebanese banks, but declined to disclose
the names of the banks. |
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The Iraqi government licensed six foreign banks in
2004, including the National Bank of Kuwait, Arab
Banking Corp., HSBC and Standard Chartered.
However, only Arab Banking Corp. operates a
fully-fledged branch in the country as the rest
chose to enter Iraq via a local partner.
"Because of the security situation, most join forces
with local banks. There are a lot of banks that have
expressed their interest Iraq, but they are waiting
for the right time," said Al Shabibi.
The country also has six state-owned banks, the
biggest of which are Rafidain and al Rasheed.
Al Shabibi hopes that Iraq's banking sector will be
strengthened as it opens up to foreign banks, as
they bring capital, modern banking systems,
technology and management.
The government is also pushing for 25 private banks
to merge.
"Our idea is to have some kind of minimum capital
for banks, at least 20 billion Iraqi dinars. Some of
the very small banks which do not have the capacity
will have to merge, otherwise they will have to
raise the capital alone," he said.
The central bank wants private banks to participate
more in the country's economic activities, and for
the country to be less dependent on the Trade Bank
of Iraq, which is financed by a consortium of
foreign lenders such as Citigroup and JP Morgan. It
provides financing services Iraqi banks are unable
to offer.
"We would like the government's import activities to
be more diversified. We want all banks to
participate. This is our policy for the future. The
Trade Bank is doing fine, but we don't want to have
to be completely dependent on that," he said.
Al Shabibi said the central bank is currently
succeeding in its fight against inflation.
"We are using the interest rate and we sell our own
bills to skim liquidity. The inflation rate now is
51 per cent, down from 70 per cent previously.
Whether it will continue to go down, we will have to
see," he said.
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