Dealers welcome CBI decision to extend time to increase banks’ capitals

Iraq CBI BAGHDAD / IraqiNews.com: Dealers of the Iraqi Stock Exchange welcomed the decision of the Central Bank of Iraq (CBI) to extend the appointed time given to the banks to increase their capital until mid 2009. Hassan Salman, the secretary general of the Iraqi investors union, said “the CBI decision to postpone the increase in the Iraqi banks’ capitals until mid 2009 was good and came at a good time,” noting that “a lot of demands were presented by investors and private banks in this regard due to the lack of capital necessary to this operation.” “The decision had a great effect on the shares’ prices of many banks, as many of them went down,” pointing out that some shares’ prices reached 1 Iraqi dinar,” Salman added.

Mohamed al-Fatlawi, an Iraqi investor, demanded to postpone the increase in the banks’ capital until the stabilization of the security situation, underlining that a number of banks will not be able to underwrite their shares until mid 2009. “The central bank’s decision aims at making the national banks prepare to receive foreign investments, the matter which will not happen soon because of the lack of the complete stability which these companies need,” he noted.

A financial expert said that “the decision has a mean reason which is to encourage foreign investors to enter Iraq which will not happen without banks.” He wondered how the Iraqi banks deal with such investments with their small capitals? Mohamed Ismail, another expert, told IraqiNews.com that despite Iraqi banks’ suffering to get good profit to increase their capitals because of the security situation, however the CBI decision is good because most banks near to the minimum limit the CBI is demanding. The CBI adviser, Muthhar Mohamed Saleh, stressed that the decision is final and aims to strengthen the Iraqi banks’ capitals.

The Central Bank of Iraq had decided to extend the appointed time given to the private banks to increase their capitals to reach 50 billion Iraqi dinars until mid 2009, giving incapable banks several options, including integration with other banks or to change their activities to financial investment companies.