The blow-by-blow received by Lebanese banks operating in Iraq. In the beginning the mandatory increase came on the capital, followed by fines imposed by the Central Bank in Baghdad, and finally the announcement the bank to its branches in Erbil and Sulaymaniyah are no longer associated with it administratively or organizationally or financially
in the last monthly meeting between Lebanon's Central Bank Governor Riad Salameh and the Board of Directors Association Banks in Lebanon, a discussion had taken place in the case of Lebanese banks operating in Iraq (10 banks). Assembly raised this issue noting that it received a letter from the Central Bank in Baghdad (and received the Bank of Lebanon a similar book) knows that the branches in Erbil and Sulaymaniyah are no longer associated with him administratively or organizationally or financially, but the Ministry of money in the region, and that it does not recognize the amounts deposited have dinars or in dollars. indicates the minutes of the meeting (No. 369) that Lebanese banks deposit with the central bank subsidiary in the two cities mentioned about $ 90 million, and thus «will be forced, if the problem is not addressed by the end of the year, to the formation of provisioning them». This situation has raised questions among bankers and wide for «the horizon of the banking business in Iraq, especially the Iraqi Central Bank imposes a substantial increase in capital of private banks in the deadline in the month of June 2016».
According traded between bankers data, the Lebanese banks bear sovereign debt securities of the branches of the Central Bank in Erbil and Sulaymaniyah, a refrain from paying Mtojbadtha to bondholders, which prompted the central bank in Baghdad to inform the banks that carry this debt, that its branches in this region no longer follow him, but follow the authority of the region that must claim payment.
For Lebanese banks, it has become that these amounts are recorded uncollected within doubtful debt list, and therefore they increasingly have to deduct from their profits provisioning backup for this debt, which will impact on their profitability. This problem came on top of a range of problems of the Lebanese banks operating in Iraq. In the last period, banks have suffered from the problem of collective fines imposed on private banks in Iraq because of employments is suspected that some of them are not trusted or a fraud. Although the banks asked the Central Bank in Baghdad scrutiny of their operations and to impose fines on all the manipulation or fraud only appears, however, that the Iraqi authorities insisted on the imposition of fines of wholesale equate all this kind of investments.
Before that, the central bank in Baghdad had been imposed on the private banks operating there, including the Lebanese banks, increase the mandatory capital to $ 70 million minimum return for opening an unlimited number of branches. This step is the result of the campaign led by the Iraqi private banks in order to prevent foreign banks from its rival. However, the contacts that were conducted from Lebanon led to the alleviation of the decision and reduce the mandatory increase of $ 70 million to $ 50 million, with the leave of the banks remained open an unspecified number of branches available.
The strikes come in the context of widespread criticism of the banking work in Iraq, where authorities imposed to provide guarantees in exchange for loans, even though the law prohibits foreign ownership in Baghdad, and this means that any credit against the mortgage does not allow a foreign bank to recover the property in case of default. In some cases, the guarantees are accounted for on some banking operations in Iraqi dinars, what confuses the bank that executes the process due to exchange rate differences, and put it high risk. As for the credit operations, the basic work of banks in relation to Iraq to speculate on the currency, because trading in foreign currencies is prohibited unless leave of the official authorities, which hinders the open lines of credit and push the bank to engage in speculation on the currency operations.
[You must be registered and logged in to see this link.]