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Rafidain Bank restructuring programme.. justifications and requirements
Articles
Dr. Haitham Hamid Mutlaq Al-Mansour
After the Prime Minister stressed, during his meeting with representatives of Ernst Young, the importance of developing the work of the government banking sector to enhance the confidence of citizens and local and foreign investors in the government banking sector in particular and the economy in general, the restructuring of Al-Rafidain Bank is considered the first of the economic reforms in the banking sector towards restructuring Iraqi banks. Governmental, agricultural and industrial sectors, in an effort to make them play a financial role that stimulates growth and stability.
Rafidain Bank has witnessed accumulated internal problems inherited from the previous regime and subsequent governments after the change, manifesting around banking, credit and administrative policies that undermined the bank’s credit capacity and limited its banking stability and operational and financial efficiency, as
Rafidain Bank still suffers from many fundamental problems at the heart of banking, which are:
The balance sheet of Rafidain Bank suffers from the debts it owes as a result of
issuing letters of guarantee and
confirming credits for the benefit of government departments and companies, which, along with the
interest accumulated on them, have exceeded their normal limits.
Decrease in the bank's credit capacity.
Limited ability to keep pace with developments in the banking industry.
A decline in the bank’s ability to fulfill its obligations according to
profitability indicators,
capital adequacy indicators, the
ratio of equity to total assets and the
ratio of equity to total deposits,
which indicates the weakness of the bank’s activity in meeting its credit duties.
The rigidity of banking legislation and the failure to build development policies for banking services through advanced banking techniques.
Hence, it is expected that restructuring will improve its performance by rehabilitating it to be able to increase its efficiency in managing its balance sheet and improve its ability to achieve indicators of profitability, capital adequacy, and indicators of resource employment.
By redesigning the bank’s organizational structure, creating new departments and merging the current ones with new ones, this can result in the development of the bank’s tools and objectives with the aim of improving the performance of the bank’s structure in the infrastructure of regulation and control, the rules of solvency and liquidity, its lending policy, and the formulation of its relationships with other banks on the one hand, government units and others. On the other hand.
Therefore, it is possible, at the theoretical level, that after carrying out the restructuring process, the bank’s performance will improve, its productivity will increase in the short and long term, and its financial and operational efficiency will be raised, as the cost of banking operations will be reduced and the process of participation in decision-making will move towards what is consistent with banking decentralization. It is expected that the structure will target What's new is avoiding credit bankruptcy by reducing the accumulation of ineffective balances and avoiding a credit crisis.
But in reality, we see that the restructuring process faces several challenges, the most important of which are the difficulty of attracting sufficient capital required, low savings rates, a weak capital market, the high cost of modern technology and the development of related systems, and the high cost of training workers in the banking sector.
Therefore, the restructuring program should focus on securing two strategic requirements:
The first requirement: It revolves around the goal of restructuring the operating side with the aim of achieving its financial stability.
The goal is to restructure Janbal Mal in a way that restores the bank's ability to comply with the minimum capital adequacy and other hedging requirements.
The second requirement: It includes two goals. The
first is concerned with restructuring the bank according to a precise and clear plan for the short, medium and long term in the institutional and operational aspects, ensuring that the bank is in harmony with market conditions and customer service and in accordance with the hedging requirements contained in the Banking Law and the Central Bank of Iraq Law, and compliance and competition requirements. As for the
second, amending the laws, regulations and instructions that regulate the work of Iraqi banks in a way that qualifies them to work in light of modern banking standards and indicators to meet market requirements and enhance the prospects and requirements of growth and stability in a way that serves the banking reform process.
views 348 Added 12/07/2024 - 10:58 AM
https://economy-news.net/content.php?id=50614
Articles
Dr. Haitham Hamid Mutlaq Al-Mansour
After the Prime Minister stressed, during his meeting with representatives of Ernst Young, the importance of developing the work of the government banking sector to enhance the confidence of citizens and local and foreign investors in the government banking sector in particular and the economy in general, the restructuring of Al-Rafidain Bank is considered the first of the economic reforms in the banking sector towards restructuring Iraqi banks. Governmental, agricultural and industrial sectors, in an effort to make them play a financial role that stimulates growth and stability.
Rafidain Bank has witnessed accumulated internal problems inherited from the previous regime and subsequent governments after the change, manifesting around banking, credit and administrative policies that undermined the bank’s credit capacity and limited its banking stability and operational and financial efficiency, as
Rafidain Bank still suffers from many fundamental problems at the heart of banking, which are:
The balance sheet of Rafidain Bank suffers from the debts it owes as a result of
issuing letters of guarantee and
confirming credits for the benefit of government departments and companies, which, along with the
interest accumulated on them, have exceeded their normal limits.
Decrease in the bank's credit capacity.
Limited ability to keep pace with developments in the banking industry.
A decline in the bank’s ability to fulfill its obligations according to
profitability indicators,
capital adequacy indicators, the
ratio of equity to total assets and the
ratio of equity to total deposits,
which indicates the weakness of the bank’s activity in meeting its credit duties.
The rigidity of banking legislation and the failure to build development policies for banking services through advanced banking techniques.
Hence, it is expected that restructuring will improve its performance by rehabilitating it to be able to increase its efficiency in managing its balance sheet and improve its ability to achieve indicators of profitability, capital adequacy, and indicators of resource employment.
By redesigning the bank’s organizational structure, creating new departments and merging the current ones with new ones, this can result in the development of the bank’s tools and objectives with the aim of improving the performance of the bank’s structure in the infrastructure of regulation and control, the rules of solvency and liquidity, its lending policy, and the formulation of its relationships with other banks on the one hand, government units and others. On the other hand.
Therefore, it is possible, at the theoretical level, that after carrying out the restructuring process, the bank’s performance will improve, its productivity will increase in the short and long term, and its financial and operational efficiency will be raised, as the cost of banking operations will be reduced and the process of participation in decision-making will move towards what is consistent with banking decentralization. It is expected that the structure will target What's new is avoiding credit bankruptcy by reducing the accumulation of ineffective balances and avoiding a credit crisis.
But in reality, we see that the restructuring process faces several challenges, the most important of which are the difficulty of attracting sufficient capital required, low savings rates, a weak capital market, the high cost of modern technology and the development of related systems, and the high cost of training workers in the banking sector.
Therefore, the restructuring program should focus on securing two strategic requirements:
The first requirement: It revolves around the goal of restructuring the operating side with the aim of achieving its financial stability.
The goal is to restructure Janbal Mal in a way that restores the bank's ability to comply with the minimum capital adequacy and other hedging requirements.
The second requirement: It includes two goals. The
first is concerned with restructuring the bank according to a precise and clear plan for the short, medium and long term in the institutional and operational aspects, ensuring that the bank is in harmony with market conditions and customer service and in accordance with the hedging requirements contained in the Banking Law and the Central Bank of Iraq Law, and compliance and competition requirements. As for the
second, amending the laws, regulations and instructions that regulate the work of Iraqi banks in a way that qualifies them to work in light of modern banking standards and indicators to meet market requirements and enhance the prospects and requirements of growth and stability in a way that serves the banking reform process.
views 348 Added 12/07/2024 - 10:58 AM
https://economy-news.net/content.php?id=50614
