Rafidain Bank Restructuring Program.. Justifications and requirements
Rafidain Bank has witnessed accumulated internal problems inherited from the previous system and the subsequent governments after the change, which appear around banking, credit and administrative policies that affected the bank’s credit capacity and the size of its banking stability and its operational and financial efficiency, as Rafidain Bank still suffers from many fundamental problems at the heart of banking, namely:
The balance sheet of Rafidain Bank suffers from the debts arising from its debts as a result of issuing letters of guarantee and fixing credits in favor of government departments and companies, which, with the accumulated interest, exceeded their normal limits.
Low credit capacity of the bank.
Limited ability to keep up with the developments in the banking industry.
The decline of the bank’s ability to meet its obligations in accordance with profitability indicators, capital solvency indicators, the ratio of equity to total assets and the rate of equity to total deposits, which indicates the weakness of the bank’s activity in meeting its fiduciary duties.
Hardened banking legislation and non-building of development policies for banking services through advanced banking techniques.
Hence, the restructuring is expected to improve its performance in what it is working to rehabilitate to be able to increase its efficiency in managing its balance sheet and improve its ability to achieve profitability indicators, capital solvency and resource employment indicators. Through the redesign of the bank’s organizational structure, the creation of new departments and the integration of the existing with new ones, which can result in the development of the bank’s tools and objectives in order to improve the performance of the bank’s structure in the regulatory and control infrastructure, the rules of solvency, liquidity and its lending policy and the formulation of its relations with other banks on the one hand and government units and others on the other hand.
Therefore, it is possible at the theoretical level after the restructuring process, the bank’s performance will improve, increase its productivity in the short and long terms and raise its financial and operational efficiency, as reducing the cost of banking operations and directing the process of participation in decision-making towards what is in line with banking decentralization. The new structure is expected to aim to avoid credit bankruptcy by limiting the accumulation of inefficient balances and avoiding a credit crunch.
But in fact, we see that the restructuring process faces several challenges, the most important of which are the difficulty of attracting and attracting the required sufficient capital, the low savings rates, the weakness of the capital market, the high cost of modern technology and the development of related systems, and the high cost of training workers in the banking sector.
Therefore, a restructuring program should be directed to secure two strategic requirements:
The first requirement: revolves around the goal of restructuring the operating side in order to achieve its financial stability. The goal is to restructure the aspects of money in a way that works to restore the bank’s ability to comply with the minimum capital adequacy and other hedging requirements.
The second requirement: It includes two objectives, the first is concerned with restructuring the bank in accordance with an accurate and clear plan for the short, medium and long term in the institutional and operational aspects, to ensure the bank’s harmony with the conditions of the market and customer service and in accordance with the hedging requirements contained in the Banks Law and the Central Bank of Iraq Law, and the requirements of compliance and competition. The second is to amend the laws, regulations and instructions that regulate the work of Iraqi banks to qualify them to work in light of modern banking standards and indicators to join the market requirements and to promote the prospects and requirements of growth and stability to serve the banking reform process.
