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Report: Arab banks expand in Iraq because of Washington!
5/25/2024
“Al-Arabi Al-Jadeed” newspaper published a report in which it talked about the expansion of the work of Arab banks in Iraq, while indicating an increase in investments in the country as a result of US sanctions on Iran.
Text of the report:
Major Arab banks expanded their presence in the Iraqi banking sector during the past months, through their cash investments and direct dealings with private Iraqi banks, amid efforts to enhance the financial and cash balances of Iraqi banks and attract foreign capital.
Iraqi banks are facing major challenges against the backdrop of sanctions imposed by the US Treasury Department on 24 banks, banning their cash transactions in dollars, to limit currency waste and suspicious transfers. This ban affected banking services inside Iraq, which prompted the Central Bank of Iraq to issue its latest instructions to return to Law No. 4 of 2010, which stipulated the approval of one or more qualified shares for joint-stock banks, on the condition that this joint-stock bank be monitored by the central bank in its home country. Which contributed to opening the way for Arab and foreign banks to open their financial credits and cash investments with a number of Iraqi private banks.
The volume of external transfers to Iraqi banks and banks, directly or through correspondent and joint-stock banks, amounted to approximately 265 million dollars per day, by purchasing the dollar through the currency selling window at the official price of 1,310 dinars per dollar, while no official statistics were issued on the size of the cash masses that were pumped to buy. Shares in Iraqi banks.
In details, the Central Bank of Iraq recently granted four new licenses to Jordanian banks, namely the Union, Housing, Jordan, and Arab Banks, and they were preceded by other licenses to Arab and foreign banks according to investment ratios contributing to the Iraqi private banking sector.
A local newspaper published that the share of Arab banks in the National Bank of Iraq amounted to 76.7 percent of the bank’s shares, while the share of the Jordanian Capital Bank reached 61.85 percent, the share of Cairo Amman Bank reached 9.90 percent, while the share of the Palestinian Arcadia Investment Fund reached 5 percent. This comes amid the efforts of the Jordanian Housing Bank to buy a stake in the Iraqi Al-Mansour Bank, to which Qatar National Bank contributed 54 percent. Earlier, the Jordan Kuwait Bank announced the signing of the agreement to purchase a 51.79 percent stake in the Bank of Baghdad’s shares.
Opportunities for acquisition
The financial and banking expert, Abdul Rahman Al-Sheikhli, said that there are no specific numbers about the volume of Arab and foreign investments in Iraqi banks, but the Central Bank of Iraq has given foreign and Arab banks opportunities to acquire large shares in Iraqi banks at a rate of more than 50 percent.
Speaking to Al-Araby Al-Jadeed, Al-Sheikhli stated that the goal of the Central Bank of Iraq in granting contributions at high rates is to try to bring non-Iraqi capital to the sector. He added that Arab countries' investment in Iraqi banks is large, amid contributions from Jordanian, Kuwaiti, Qatari and Emirati capital.
He pointed out that the Central Bank of Iraq's invitation to foreign banking investments came due to the migration of Iraqi capital abroad and the smuggling operations resulting from the financial and administrative corruption that has spread throughout the entity of government institutions. He added that the lack of cash liquidity in banks is due to the loss of citizen confidence in the Iraqi banking system, specifically private banks, which prompted the necessity of bringing in foreign investments.
New investments support Iraqi oil.
Al-Sheikhli explained that Iraq today is witnessing relative stability in the political, security and economic system, and the investment environment has become safe and attractive for investment, especially after the emergence of real projects in the country, whether governmental or within the private sector. Al-Sheikhli stressed the importance of using foreign investments, which will contribute to creating additional resources away from the oil that Iraq has relied on over the past years.
The US sanctions imposed on private Iraqi banks and the restriction of dealing in foreign currencies gave the opportunity to foreign and Arab banks that hold accounts with international and American banks to contribute to the market share in Iraq in a very large proportion. Financial expert, Safwan Qusay, said that reconsidering restricting the movement of these Iraqi banks would prevent the monopoly of foreign banks operating in Iraq, which hold large accounts and credits with Iraqi banks at a rate exceeding 49 percent of the capital.
During his conversation with Al-Araby Al-Jadeed, Qusay stressed the necessity of protecting the financial system and providing an integrated banking system that relies on reviewing the policies of the Central Bank of Iraq by preventing monopoly operations on the sale of foreign currencies, including the dollar. Qusay stressed the importance of lifting the sanctions and restriction system and replacing it with the correction system, and guiding the restricted banks to enhance their ability to comply, meet the needs of customers, know the movement of the Iraqi dinar, and invest in technology. He pointed out the need to review the mechanism for obtaining the dollar and the share of foreign banks from it.