The latest news from the frontlines in Iraq

The Real Deal in Banking in Iraq

A customer counts Iraqi dinars at a money changer in BaghdadThe private banks in Iraq are still operating with no major problems.  There are a few exceptions. Al-Warka Bank is still in a major court battle with the Central Bank of Iraq.  A few years ago Al-Warka Bank delisted from the Iraq Stock Exchange (ISX) and the banks financial statements are unavailable. It is difficult to find out exactly the status and health of Al-Warka Bank. The bank owes answers to many questions of depositors and investors.  What we do know for sure is Al-Warka bank suffers from lack of liquidity.  The bank is unable to raise the 250 billion capitalization requirements by the Central Bank. This will compound the bank problems. An official order from the CBI is that all private banks will have a capitalization of 250 billion by June 2013. There are tools the Central Bank can utilize to assist Al-Warka Bank and unfortunately these tools have not been implemented.  Al-Warka bank may be worth saving and it is all up to the Central Bank. Question, can the Iraq Central Bank afford to liquidate a private bank? Good question and I have no idea.

The Iraq economy continues to be in a transitional mode with billions and billions of dollars needed for infrastructure. However, with inflation on the rise and the political situation the way it is. It is definitely, not encouraging investments. Of course, they are investments however, not as it should be. The Iraqi government may find itself in an economic bind with lower oil prices and production lower than last year average. The Iraq government cannot turn to Iraq’s private banking sector to assist in development. The Iraq government must find ways to increase direct foreign investment.

The banks found new love in the daily CBI auctions. I am joking. The banks have been taking advantage of the daily auctions since it started in 2004. Private banks making profits with limited risk. Yes, they turn in their Iraq dinars at the CBI auctions for hard currency. Moreover, they say Iraq government is conducting de-dollarization. It does not sound like it when the U.S. dollar is still king in Iraq.

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American Contractor
May 17, 2013
Banking, Central Bank of Iraq
4 comments
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A Closer Look at The Iraqi Banking Sector

A Closer Look at The Iraqi Banking SectorRecently Sansar Capital Management LLC published a report on the Iraq banking sector. The Iraq banking report is well written and very informative. I’ve written some notes on some of the details in the report. Such as there is no de-dollarization of the Iraqi economy. Al-Warka Bank is still in receivership and bankrupt.  A rumor that HSBC is looking to exit from its stake with Dar Es Salaam Investment Bank.

Over 80% of Iraqi’s do not have a bank account.

ATM machines are not connected to the national switch and as such customers of one bank cannot access their funds from ATM Machines from another bank.

In the future, the implementation of the national switch and the establishment of the Iraq Interoperable Mobile Payment System (IIMPS).

The national switch which has not been established would connect all existing ATM machines, bank branches and point of sale terminals to one central communications network.

The idea of the IIMPS would be customers to make payments at retail stores and be able to transfer money from their bank account to the retailers by the use of cellular phones. This would be great when they get this off the ground.

One of the contributing factors of the low usage of banks by Iraqi’s is the lack of trust in the Iraq banking system. The lack of deposit insurance institutions that would guarantee customers their money back in the event of bank failure. This problem was brought to the forefront recently with the widely publicized bankruptcy of Al-Warka Bank. Depositors beware of Al-Warka Bank.

The two state banks Rasheed Bank and Rafidain bank are still trying to restructure with the help of the World Bank.  Both state banks are under capitalized.  These two state banks will be unable to compete in the future with private banks.

The Iraq banking still has more improvements to make in order to compete in the 21st century Middle East. It will get there just take a little more time.

Read the report by clicking on the link below.

Sansar-Capital-Iraq-Bank-Sector-Report-May-June-2013

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American Contractor
May 10, 2013
Banking, Central Bank of Iraq, Iraq
2 comments
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British Coming to Iraq June 2013

IBBCWhere are the American companies? The British are going 100 deep to Iraq in June. British company representative’s are coming for five days visiting Erbil, Baghdad and Basrah.

American Contractor
May 9, 2013
Iraq
0 comments
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PM Maliki Highest Paid in The World

PM Maliki Salary 3 million per year for the Job of Prime Minister

I would hope the Iraqi Parliament would take notice of the highly paid Prime Minister Maliki and evaluate his performance since he has been on the job to warrant such a high salary. To be paid the most in the world of any government leader is a statement in itself.

If PM Maliki deserves it than let him keep it but I think Parliamentary members are thinking twice about their own salaries the next time they are up for re-election. I see pay raises from PM Maliki to the Iraq Parliamentary to keep the good times rolling!!

You can read the article from the University of Brussels in Belgium who conducted the research.

American Contractor
May 7, 2013
Iraq, Nuri al-Maliki, Prime Minister
0 comments
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Iraq Burns 2 Billion dollars a Year

UntitledThe Iraq Oil industry burns 2 Billion dollars a year. Big Oil losing interest in Iraq.

The waste is caused by lack of oil infrastructure to capture and process all the oil and natural gas. Talk about Fraud Waste and Abuse. Iraq Gov looking everywhere in the region to help with the Iraq oil & Gas projects and giving most of the oil fields to China and now looking at Indonesia.

American Contractor
May 6, 2013
Oil
1 comment
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Massive Ordnance Penetrator

The Massive Ordnance Penetrator (MOP)

I wonder what the Persians are thinking now after seeing this awesome demonstration of cutting edge technology.

American Contractor
May 6, 2013
Iran, Military
0 comments

Another Day in Iraq

There has been major conflict between the Shia, Sunni, Kurds, along with the Iraqi government that is causing a rift in passing the Iraq national budget. There are many other hurdles in the process of getting a national budget passed in Iraq. For starters, there is a parade of non-stop protests in Iraqi cities calling for the ouster of PM Maliki.

In the meantime, PM Maliki will hold onto power and look forward to the next national elections in 2014. There are Iraq politicians carefully taking sides and others who are just watching the current situation unfold.

Most politicians are refraining from participating in anything related to government affairs, such as passing a bill. They are fearful of alienating themselves should a new power government powers step up. The typical Iraqi politician is very cautious in who he aligns himself with as it could result in a loss of employment or demotion from a high level position from within the central government.

The Kurds are disgruntled with the Iraq central government. The Kurds had previously maintained the national budget at 17% and now PM Maliki wants to cut it to a mere 12%.
The cut is estimated to be costing hundreds of millions of dollars. The intention is to fund services and projects. The reason behind the cuts is to compensate for the deficit when the Kurdistan Regional Government (KRG) decided to stop paying the central government in oil sales.

Within the past year, the Peshmerga Militia has been positioning themselves at all major crossings into northern Iraq. The Iraq professional Army would destroy the Peshmerga Militia in an all out battle once command by PM Maliki.

The Baghdad central government has accused the KRG of selling oil to Turkey and not contributing to the national budget. In addition, the Turkish government official has admitted purchasing oil from the KRG as well as from some southern Iraq companies. The Turkish official has said that the intention was to spread the wealth around.

ExxonMobile has made a corporate decision to drill in northern section of Iraq and is contemplating on giving up the oil fields in the southern part.

Regarding the Iraqi dinar currency situation, there has not been any signs of uplifting the suspension of the printing of the new Iraq dinar currency. A finance committee meeting will commence in Late March or early April to determine the status of the printing of the new currency. Be aware that, this is not to be mistaken as a sign that something is going to happen in March or April.

Thanks for reading and supporting the American Contractor web site.

American Contractor
February 17, 2013
Iraq, Iraq Dinar, Kurdistan
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For expat entrepreneurs, the end of the China dream?

And the Guru’s say China is where it’s at. Think Again.

American Contractor
September 8, 2012
China
0 comments

Zeros cannot be removed from Iraqi dinars during 2013

I just mentioned this on 30 August glad to see the AKNEWS reading the American Contractor blog.  :)

http://www.aknews.com/en/aknews/2/324333/

Leave your comments below.

American Contractor
September 3, 2012
Banking, Iraq
1 comment

The Iraq Update

The Central Bank of Iraq (CBI) continues to be the subject of investigations by the Iraqi government. They are looking into crimes or potential crimes committed by members of the CBI. The investigation of the CBI members will continue on and is very complex.

The project of introducing new Iraq currency continues to be suspended by the Iraq government and more specifically the Ministry of Cabinet. Prime Minister, Nuri Maliki, has not lifted the suspension. Everyone involved in the decision making ie. Iraq Cabinet, Parliament Finance Committee, Staff members of the CBI and other members of government have not come to a decision on exactly when they will introduce the new Iraq currency. It appears no conclusion has been determined and distributing the new Iraq
currency may commence on or between 2014-2018. This is to coincide with the next upcoming elections in Iraq.  I would like to announce that I am currently back overseas working.

The New Iraq currency has not been printed. The CBI has not yet been authorized by the Iraqi government.  There will not be any revaluation in the year 2012. Also, the electronic
software systems intended for the banking industry in Iraq have not been implemented. The problem is the lack of training of the software to the banking managers and employees. The training may take up to two years before you see 100% active participation.

American Contractor
August 30, 2012
Iraq
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