Central Bank of Iraq to allow five more banks to operate (03/11/04)

The Central Bank of Iraq stated today that it will allow five Middle Eastern banks to operate in the country, bringing the number of foreign banks it has increased to eight.

A senior official from the bank, who has requested not to be named for security reasons, said that Jordan's Arab Bank and the Bahrain-based Arab Banking Corporation had received licenses, while two Iranian and one Turkish bank had been granted initial approval to conduct business in Iraq.

"The Export Bank of Iran, the Agricultural Bank of Iran and Turkey's Bank of Agriculture have asked us to grant them licenses to open branches in Iraq and we have given them our initial approval," the official told reporters in an interview. The CBI awarded the first licenses in decades to HSBC Holdings Plc and National Bank of Kuwait to transact business in Iraq. They've yet to do so, though, and were previously warned to open their doors or risk losing their licenses.

The official said that the CBI is willing to wait until early next year before penalising non-operating foreign banks. "We are ready to extend that period to three more months until the end of March 2005 if they ask for such extensions," he said. Originally, the CBI had invited international banks to bid for five-year licenses. It said the licensed banks would start with a minimum capital in Iraq of $25 million each. The new banks would be subject to the rules and monitoring of the CBI, it added.