President of the Association of Private Banks: the system of corruption is more dangerous to Iraq than an advocate

by **claud39** Wed Dec 26, 2018 4:06 pm

https://www.alaraby.co.uk/economy/2018/12/26/%D9%88%D8%AF%D9%8A%D8%B9-%D8%A7%D9%84%D8%AD%D9%86%D8%B8%D9%84-%D9%85%D9%86%D8%B8%D9%88%D9%85%D8%A9-%D8%A7%D9%84%D9%81%D8%B3%D8%A7%D8%AF-%D8%A3%D8%AE%D8%B7%D8%B1-%D8%B9%D9%84%D9%89-%D8%A7%D9%84%D8%B9%D8%B1%D8%A7%D9%82-%D9%85%D9%86-%D8%AF%D8%A7%D8%B9%D8%B4

[rtl]President of the Association of Private Banks: the system of corruption is more dangerous to Iraq than an advocate[/rtl]
26 December 2018

President of the Association of Private Banks: the system of corruption is more dangerous to Iraq than an advocate 368

[rtl]The head of the Association of Iraqi private banks, Wadih al-Hanalal, in an interview with "the new Arab" reveals very dangerous indicators affecting the sector, and the enumeration of the causes of the crises experienced by, most notably unfair competition for the benefit of government banks.

Here is the text of the interview:
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[rtl][Asharq Al-Awsat] How did the private banks in Iraq develop and what kind of services does the sector lack?
Private banks in Iraq have gone through different stages of development. The financial system has become uniform in the world. The Iraqi banks have to follow developments in this framework to be recognized Iraqi banking work globally, especially with regard to dealing with correspondent banks.

The developments covered counterterrorism and money laundering standards, the Basel Rules, the "Know Your Customer" principle and governance rules ... It was not easy for us, as global financial regulations and rules were pursued and accelerated. Especially as these rules burdened us with the high cost required by the commitment to these procedures.

On the other hand, when we adhere to the new rules of the financial system, reliance on human resources is reduced to the benefit of technology-based regulated financial operations.

Reality, has challenged us in terms of cadres and jobs. In our opinion, private banks need to activate new products to provide more operating power and expand their business.

Note that the Iraqi financial sector was adopted in previous periods on the currency auction, which we call the "window selling the currency."

However, after the window has stopped, the challenge is great, especially with regard to mechanisms for activating lending to the economic sectors from agriculture, industry, technology and housing.

What is the size of the profits of Iraqi private banks? What about the expectations of the end of this year?
Until the sixth month of 2018 it was found that all Iraqi banks recorded losses. So with the stop of the currency sale window, we must strive to activate the sector through new products and generate employment. According to our indicators in the Association, and linked to financial results, private banks will record losses in the results of 2018.

What about assets, size of lending and how it is distributed across sectors?
Assets amounted to about 167 trillion dinars, 90 percent of them in government banks. The volume of cash credit is 37 trillion dinars, including 6 trillion dinars bad loans, and I think they are large loans to government banks. And the value of deposits amounted to 69 trillion dinars, 86 per cent of them in government banks. The cash volume in circulation amounted to about 43 trillion dinars.

* What is the number of troubled banks and are banks declared bankruptcy?
The policy of the Central Bank is based on non-bankruptcy of banks. The number of banks that have been troubled is eight banks, but after correcting their position, there are only two banks left to three banks suffering from crises.

[Asharq Al-Awsat] Where are the imbalances in the private banking sector, are they legislative, organizational or subjective?
Frankly, we have experienced the transformation of socialist Europe and its transformation.Let us talk about the senior leadership, if the political will is not present to make structural changes in the banking sector the results will be a weakness and gaps.

The political will in Iraq does not exist to transform the public banking sector into a private one, so that the dependence is 80 to 85 per cent on government banks where the cash mass is concentrated.

For example, with all my respect for the Iraqi Bank for Trade, it takes the majority of government documentary credits, while the General Secretariat of the Council of Ministers determines that each Iraqi private bank can get 30 million dollars of the appropriations, to be applicable to all safety requirements. But in practice few banks can apply these requirements.

The fact is that we are frustrated and insecure, as there is no fair competition between the public and private banking sectors.

[Asharq Al-Awsat] Are there attempts to drag the private banking sector to become under the management of politicians, or is it the opposite, where government banks are supported by the profits they earn?
I think that there are interests and a system of corruption is not clearly fought, and this system is more dangerous than a preacher on Iraq. Because it is a clear enemy, but corruption is not clear. The ministries that come in turn are calculated on specific parties from the Ministry of Finance and others represent corruption in particular.

The Ministry of Finance and government banks should strengthen their reliance on competencies rather than patronage. The five government banks are directly subordinate to the Ministry of Finance.

In these banks we see the chairman of the board is the same director general in contravention of governance, and he himself is linked to the Minister of Finance.

[Asharq Al-Awsat] What is the size of private banks' contribution to financing the Iraqi economy
Our contribution as private banks in the economic development in Iraq does not exceed 1.5 per cent, and the reason that after the end of the stage of Daash, which confiscated 221 bank branches in the four provinces in Nineveh, Anbar, Diyala and Salahuddin, and seized tens of billions of dinars, did not compensate any of our losses. While we note that during the financial crisis in 2008, US authorities helped banks that were damaged.

Consequently, the sector has been plagued by lending, fearing that its funds will not be recovered. On the other hand, confidence was an important factor with the Kurdistan region, when the deposit of public deposits and detained for a long time, which caused us a major disaster, of course, the region returned a portion of the funds, but not all.

Third, the tax should be uniform at the level of Iraq according to the Constitution, but the Kurdistan government began to deal as a region independent of the center, which created investment concerns, so there is a real problem in pumping money.

In terms of financing for development, for example, before the Dahed events, areas that witnessed social sit-ins needed $ 100 to $ 200 million to create small and medium-sized enterprises.

But after the occupation of the pro-liberation and then became these areas need to 88 billion dollars for human construction and economy. Imaginary tragedy in the spending difference ...

For these reasons private banks have fears of lending, although we met some politicians say that private banks do not provide loans, but gave us a safe environment for lending in order to do so, not to go money without compensating banks.

* As a result, we have 221 bank branches seized by the caller, and other banks stumbling, how many victims of depositors?
There is no limit to the numbers or the size of deposits. We need a system that details these details in addition to all the information about applicants and applicants.[/rtl]

[rtl][Asharq Al-Awsat] In light of this reality, should the Iraqi citizen trust the private banking sector?
The will to change the course of crises is the top of the pyramid, if the latter supports banks at the expense of another course will not trust the Iraqi citizen and non-Iraqi private banking sector.

If we go to the Iraqi stock market, we see things that do not happen in any country in the world, where the stock is sold under the nominal value of 75 to 85 per cent, because of the economic and financial crisis, and this is a tragedy.

The government is supposed to take steps to shift from dominating the state banking sector to supporting the private sector and working towards fair and legitimate competition. If all deposits are in government banks How do private banks carry out lending?

[Asharq Al-Awsat] Is there a mechanism for private banks to restore people's trust in the sector?
I think one of the important mechanisms that private banks must follow is to start working on strategic and creative projects, which is part of their mission. The success of the projects attracts more shareholders and depositors and strengthens confidence in the sector, despite the existing legislative restrictions that limit our work and mobility in the economy, and we call for reconsideration.

* Private banks will enter the year 2019 amid crises that have no solutions, what are the prospects for your work next year?
Our prospects are clear, we are working and we continue, the country has very large requirements and the political will has become the reality and so we will work on reconstruction, networking, training and developing our tools. The private sector is the pioneer in building the country, this is our conviction, if not in our generation, in future generations. We will not stop working on special projects to ensure our continuity.

* Where do you get profits in 2019?
Part of the work we are going to do is to run the projects with good returns, and ask the banks to start construction and completion to achieve profits, otherwise in four to five years, if the situation continues, the number of banks will shrink from 70 to 20 banks or 30 banks, Market or merge.

So, no options ahead of us only creativity. There is a new culture we are trying to develop and it is investing in people. In order to achieve our sustainability, we must initiate community projects that benefit from the long-term benefits of society on the one hand and the banks on the other, and the Association works on this.

We pump some of the profits into projects that are useful to citizens, environmental, cultural and others. We have made profits in the past years and pumped some of it into community projects. Finally, I emphasize that governance is essential to know how to properly manage cash flow.

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Diversification of products and identification of investment sources
The head of the Association of Iraqi Banks, Wadih al-Hindal, asks about the possibility of increasing the benefits of savings during the coming period to attract depositors. "The interest rate on deposits and savings is also linked to lending. As long as there is no secured credit, Savings, the process is interrelated. "

"Banks are reluctant to lend in an unhealthy and unhealthy environment, so we need to diversify our products to attract profits, and then we are working to enhance the benefits of savings," he said.

"There is an important point to talk about - banking expertise that plays an important role in identifying investment areas - for example, Iraq needs housing units, lending in this product is necessary and at the same time, or supporting smart systems in technology so that banks To develop this sector that generates guaranteed profits. "

"The World Bank is always talking about three determinants of successful investments, human resources, knowledge of operational risks and then scrutiny," he says, "in some banks these principles are not available to identify projects that need to be supported.