Iraq's banks rely on government support to overcome the effects of the Islamic state

Iraq's banks rely on government support to overcome the effects of the Islamic state

05/12/2016

Iraqi private banks is pinning its hopes on the government to improve its financial statements, which severely affected the organization of the Islamic state control over large areas of the country.

Tariq Ali said head of the Iraqi private banks association, told Reuters in an interview on Monday that a number of banks will not be able to pass the endurance international standards current capital levels tested.

Tariq said "about 100 branches of banks have been lost in the hot all the assets and funds their buildings and areas.

Everything has been without any compensation."

"If the work of the stress test (stress test) at the present time must take into consideration the current situation, which is going through the country and the Iraqi banking sector."

The weakness of private banks and does not affect the banking sector as a whole which is dominated by state-owned and which depends on the oil-rich government in Iraq, activities of banks.

But it represents a setback for the government's efforts to develop the private sector and reduce the country's dependence on oil.

Tariq said that the central bank may pose the possibility of establishing a special fund totaling 500 billion Iraqi dinars as a means to stimulate private investment banks in strategic infrastructure such as housing, transportation and sanitation projects.

In this way the government provides banks continued active help in the reform of its financial statements.

The head of the Association of private banks, "the central bank is now in the final stages has sent a letter to the participating banks to determine their participation rates. All banks have the right to be involved."

He continued, "In addition to the interest of these banks will enter a long-term guaranteed projects."

In contrast to the right of the assets of banks and their customers from the damage caused to invade northern Iraq, militants also weird in a strong turnout, the withdrawal of funds which weaker banks. People were afraid that they can not get their money deposited in banks. Iraq relies almost entirely on cash transactions.

As a result of the war in Iraq was and disorder since the overthrow of Saddam Hussein in 2003, Iraqis refuses to use the banks for fear that violence prevents them from getting it or to impose restrictions on the withdrawal of funds from banks.

The suffering of the private banks is much greater than the state-owned banks, which relied on government to achieve liquidity in transactions over the wars in the country for 36 years and through sanctions imposed on it.

Tariq said that the state-owned banks - Rafidain and Rasheed, agricultural, industrial and real estate and the Housing Fund - controlled together 86 percent of the total deposits of $ 48 billion, while distributed the remaining percentage of any seven billion dollars to private banks and the 45 banks.

Tariq said, "there were many withdrawals of deposits by citizens because the conditions at the time the liquidity required to be available to them."

He added "I was banking heavily hit at the time, with a drop of lending and letters of guarantee and also executing government projects fell."