Recently 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.
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