Global banks eye Iraq but questions remain

BAGHDAD - Agence France-Presse

With millions of potential customers, few have bank accounts in Iraq. AFP photo

Interest by Citibank and Standard Chartered to expand into Iraq highlights the vast potential of the country’s banking sector, but the experience of a global rival points to the many pitfalls they must navigate.

With tens of millions of potential customers, few of whom have bank accounts, the country could provide a windfall for firms that manage to grab a foothold.

But outdated regulations, a preponderance of state-owned banks, poor infrastructure, and a litany of other obstacles mean succeeding in Iraq’s banking sector is no mean feat.

“We see Iraq as the next big thing,” Mayank Malik, Citi’s head for Jordan and Iraq, told. “We see this as a giant which is waking up.” But while Malik voices optimism over the potential of Iraq’s banking sector, major obstacles persist.

As Citi was opening an office in Iraq last month, HSBC announced shortly thereafter it would pull out of Dar Es Salaam, a local bank in which it holds a 70 percent stake. “At this stage, we will not be able to make further comments on the transaction structure and timing,” an HSBC spokesman said.

Analysts have pointed to a number of key difficulties, including a lack of modern regulations to give Iraqis confidence in finance.