Bank Services in Iraq Need Improvement

With Iraq’s recovery still underway, there are significant gaps in the country’s ability to provide financial services. Investors looking for opportunities in the country might find them in banking, following the revelation of the low per capital banking ratio in Iraq. Currently there is just one bank per 40,000 people according to the Iraqi Central Bank. This is a large difference compared to other countries in the region, where there is one bank per 10,000 people.

Muzher Mohammed Saleh, deputy governor at the bank, said “Increasing the number of bank branches in Iraq is a double-edged sword. The opening of any bank should be coupled with an increase in capital, because no increase in capital may lead to dependence on the deposits of citizens and this is risky.”

Saleh continued, “The owners of banks welcome the idea of increasing capital considering that this will lead to the introduction of additional shares in the market and their prices will decrease.”

According to the Central Bank of Iraq website, there are 7 state banks currently operating in Iraq, 23 private banks, and 11 Islamic banks. There are also 10 foreign banks, several of them from Lebanon.

The most prevalent state banks are Rafidain Bank, with 190 branches throughout Iraq and abroad; and Rasheed bank, with 150 branches inside and outside of the country.

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