The 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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