Private Banks Paralyzed Due Government Banks Monopoly, Banker Says

BAGHDAD / IraqiNews.com: Chairman of Commercial Gulf Bank  Abu Talib Al-Hashimi stated that the Iraqi private banks became semi-paralyzed due to the monopoly of governmental bank. He described that the skeleton of the banking system as “hygienic”, with infrastructure shortcomings that do not fit with  the development of Iraqi economy. Hashimi told IraqiNews.com that the Iraqi banking system suffers infrastructural shortcomings that do not match with the governmental trends for future free economy developments, which believes in developing the private sector in different fields. Iraq declared, earlier, the delay of a  programme to re-organize Iraqi financial system till 2013, which was expected to re-organize the skeleton of the main two governmental banks, Al-Rasheed and Rafidain banks, as well as the Supervision Department at the Central Bank of Iraq and developing the private banking system He stressed pin-pointing the shortcoming of the present system and determining its loop holes. Hashimi criticized concentrating governmental deposits and international remittances at these two banks. “This situation made the private sector banking system paralyzed and lacking its flexibility as private banks” he added. He added that the Central Bank of Iraq “obliged private banks to raise their capitals to 100 billion Iraqi dinars at mid of this year, which to be increased again to 250 billion Iraqi dinars by 2013, which led to the decrease in their positions in stock exchange market. “If the bank cannot reach this figure, he has either change its activities or merging with other banks”, he added. He elaborated that some banks want to be merged but they will encounter difficult procedures that exceed 120 days, with limitation of their boards’ authorities.   As for a remedy for this situation, Hashimi suggest an amendment for the Central Bank of Iraq Law and other private banks, where the Central Bank will supervise government and private banks alike, in addition to other financial institutions in the country. “Laying out a data base for the clients and banks will limit money laundering and financial breaches, which matters are not found in the present banking system, despite its importance”, he added. RM (TS)/SR 940