Samir Abbas Al Nassiri *: banking integration best solutions to promote private banking sector
By سمير النصيري
- Posted 03/02/2016
Iraqi economy suffers from severe economic and financial crisis in almost a year of external and internal economic impact was evident on all economic sectors which are already suffering from real challenges in their activities for several years and we are dealing with here is the suffering of the Iraqi banking sector
and particularly the banking community (private) exacerbate the problem and magnifies them making reflected negatively on the funding and investment activity
and thus led to the PitStop and vulnerability to the economic cycle in the country which had weaknesses in banking the obvious implications of funding Macroeconomic movement so that it will turn the recession into a depression and then, God forbid, to collapse
unless effective and fast solutions for all the repercussions and economic challenges through the study and analysis of reality and causes and results expected by 2016 and is anticipating continuing instability in world oil prices and the costs of the war on terror and political and security instability and is the basis for economic stability.
The effects of the financial crisis on the activity of the private banking sector
Study and analyse the results of the work of some large banks in light of preliminary financial indicators as of 30/9/2015 compared to last year we observe the ebb of activity and investment in the national alakottsad service through the weakness of its contribution to GDP as the deposits decreased by 59% (operating) (cash credit granted + investments) fell by 39% and total assets decreased by 43% and profits dropped by 43.5% because of declining revenues and continuing banking operations expenses with the same rates for last year
and more importantly in this analysis is Bank exchange rates by ranging (5% – 74%) which had a big impact on the access of some banks to lower liquidity limits set by the Central Bank of Iraq aalbalghah 5% of the total deposits
in addition conditions in hot zones due to its occupation by the terrorist and Islamic State to steal these banks in these provinces and financially harmed by things beyond its control as well as falling shares in Iraq market for noThe financial differences (50%-75%)
and the displacement limits (3600.000) displaced persons to all governorates of Iraq led to mostly not to reimburse borrowers and banks that customers because of the liquidity crisis to go to withdraw their deposits from most banks and not placed additional sums
all led some banks are unable to fulfil their commitment to customers, creating a kind of lack of confidence in the banking sector generally and especially private banks.
Unsettling banks in providing better services to citizens in addition to differences between Kurdistan and the Federal Government and central banks abstentions in Erbil and Sulaymaniyah re bank deposits credited.
So it has to be rapid and radical solutions needed for private banks from the current reality and which can lead to bankruptcy and financial collapse.
Wizards and solutions
We believe that the task and basic solutions to bypass Iraqi banking sector problems currently faced by most private banks and also at a later stage the Government banks will face a serious thought by the Central Bank and Ministry of finance in cooperation with the Economic Commission in the Council of Ministers and the Association of private banks in the direction of the study and analysis of business results and the Iraqi banking sector financial indicators as at 31/12/2015
and focus on deposits and liquidity and financial position and capital and reserves and the internal and external banking revenues and profits
and more importantly Economic Outlook Of the continued fallout from the financial crisis affecting the country in 2016 and 2017 in light of global economic volatility
and variables based on this to involve experts in the private sector bankers and benefit from their experience and World Bank reports on the financial situation in Iraq out of the outcome of important decisions to save the Iraqi banking sector from collapse and that what comes first and foremost solutions:
First: the Central Committee headed by the Central Bank and Finance Ministry membership and Finance Committee in the Iraqi Parliament and the Association of banks and bankers, experts from Government and the private sector assume study and analysis in light of the commissioning of accounting standard international standards work impartially to determine the efficiency of each bank.
Secondly, in the light of the results of the above evaluation is classified as private banks according to the approved standards in the areas of investment and operating costs and operating and financial and investment activity and liquidity and capital adequacy and development of services offered to customers the most important technical development of modern banking regulations.
And in light of the damage banks shouldered because of terrorist acts and bad debts.
III: banks are classified into three levels:
First level: large banks and financial position and financial position and good funding.
Second place: medium-sized banks and financial position and capable of evolution.
Number three: banks suffering from weakness in banking activity and liquidity rates drop to a minimum and is less than 5% of the total real less than werasmalha deposit 250 billion dinars and bad debts have exceed 50% of the capital and expenditure higher than its revenues.
IV: after the results of the assessment, the Central Bank shall notify the banks rated third place with optional integration agreement with another bank or more of same rank according to article 150 of the corporate registration Act 21/1997 and no later than the first quarter of this year and the Central Bank applies powers reversed requiring compulsory integration of these banks in both cases you must specify almvahm and procedures for banking merger as follows :
1. identify banking integration
Is an agreement or consortium of bankers or more amicably (reflex) or forced (by decision of the Central Bank) and dissolves in one banking entity and that the new entity has the ability and effectiveness in achieving the objectives of the merged bankers and monetary policy goals and national economy.
2. types of banking integration
-Optional integration Elodie
It is this kind of merger agreement and in conformity with the will of the bankers or more after negotiations and agreements between the Governing Council and public bodies of the banks or more after the feasibility study of all aspects and activating the new entity of the objectives with the obligation to do the title all previous commitments and customer benefits.
This is a decision of the Monetary Authority (Central Bank) after reaching full conviction that target bank stumbled and it imposed the guardianship or filtered in order to preserve cash and shareholders and exceptional circumstance the Iraqi economy.
That and help the Monetary Authority by providing incentives for ailing Bank such as tax breaks and loan grant assistance for clear and specific guarantees.
3. for the purpose of successful banking integration requires:
A-data and information in accordance with the principle of transparent disclosure of all reporting banks bank merger.
B-economic feasibility study and expected results when blending in these studies are evaluated by the Monetary Authority before making a decision.
4. carry out financial and administrative structure for the targeted banks before the merger and identifying technical and administrative manpower needed to run the new entity.
5. If the bank mergers in accordance with the above will check the following:-
-Increase the capacity of the new Bank to activate his activities in all areas, most notably the rise in the capital and income of banking and financial centre.
B-increased net profit which yields increase the value of his shares on the stock exchange and increased deposits and rising number of clients and increase the number of individualize and enhance confidence and is the most important thing in the banking business.
C-the new Bank's commitment to fulfilling all his obligations towards financial institutions and to previous customers.
VA: other solutions to save private banks within the third arrangement is buying some of its stock by the Government and banking sector subject to auditing financial alrkabbh divan.
Vi: convert Rafidain and Rasheed after restructuring of large private banks after merged with large private banks and sober.
VII: a Development Bank and a new investment partnership between the Government and the banking sector and the Government's contribution does not exceed 25% on mental managed the private sector and the role of Government direction and control.
(*) Researcher and Economist
Copyright lshbeth economists. Allow the quote and republish provided indicate the source. 3 February 2016