Thread: Archive News - Iraqi Dinar Think Tank - 22/06/2010 - 04/10/2010

Lending still anemic at foreign-invested banks

Last month, Central Bank of Iraq governor Al-Shibibi told AFP he was hoping foreign banks would play a bigger role in developing Iraq’s financial system. From the banks’ point of view, he said, “the prospects are good, except for security.”

But the foreign institutions that have already entered the Iraqi market through investments in local banks don’t yet seem to be finding all that many good opportunities to grow their lending businesses. In fact, their loan-deposit ratios tend to be even lower than those of their wholly locally owned counterparts.

Consider the 13 ISX-listed banks in the chart, for example, of which the following five (the starred ones) have foreign investors: BMNS (National Bank of Qatar holds 23%), BBOB (Burgan Bank, 50.6%), BCOI (Ahli United Bank, 49%), BNOI (Capital Bank, 59.2%), and BDSI (HSBC, 70.1%). As of the end of last year, the last four of these had the lowest loan/deposit ratios in the sample. Only one of the five had a ratio above 20%, while the subsidiary of global giant HSBC ranked last with a ratio of just 4%. (The ratios are computed by dividing the “monetary credit” by the “current and deposit accounts” balance sheet items given in the companies’ 2009 annual reports.)

And while capital adequacy might be a constraint on lending even for banks with large deposit bases, this doesn’t appear to be the explanation for the poor showing of the foreign-invested banks as they don’t tend to have less capital. In fact, from the chart you could only conclude that capitalization and the L-D ratio are completely unrelated.

So why aren’t the foreign-invested banks lending? Presumably security is not the primary issue for banks that have already entered the market. More likely reasons can be found in the responses of executives polled by the Economist Intelligence Unit last July, 64% of whom said they would not invest in Iraq. In addition to violence and lack of infrastructure, they were deterred by “corruption, the bureaucracy, inadequate contract protection, and credit risks.”

If these are the main obstacles to bank lending as well, the real problem is not the security situation but the weakness of the Iraqi state. Until there is some improvement on this front, it would not be surprising if lending remained anemic at private-sector banks in general, whether foreign-invested or wholly locally owned.

http://www.iraq-businessnews.com/201...nvested-banks/

Fraud Probe At UK Money Printing Factory

One of the world's biggest money printing factories is being probed by fraud investigators over dud banknote paper.

De La Rue - which employs 600 people at its Overton factory in Hampshire - has sent a file on some workers to the Serious Fraud Office.

The probe will centre on allegations staff faked certificates which verified the quality of banknote paper. The company said "appropriate disciplinary action" was being taken. Nicholas Brookes, the company's chairman, said: "The behaviour of some of our employees in this matter was totally unacceptable and contravened De La Rue's rigorous standards.

"We do not tolerate such behaviour. The company has reported its findings to the relevant law enforcement agencies."

The company is the world's biggest supplier of banknotes, and paper to print it on, and has customers in 150 countries. It was forced to temporarily halt production at the Overton factory on July 21 over concerns about the quality of banknote paper. Initially the problem was believed to be confined to one customer, and related to "quality and production irregularities".

Chief executive James Hussey quit after the firm said sales would be affected, sending its shares down 10%. But in an update De La Rue revealed that it had asked the Serious Fraud Office to step in. It said some of its employees had deliberately falsified certain specification test certificates "for a limited number of customers".

De La Rue said that the debacle had cost the company an initial £35m in lost profits. It said the irregularities had now been sorted out and it was ready to start shipping again to the customers concerned. Last year the company made profits of £103m and was forecast to make £95m in the current year.

http://uk.finance.yahoo.com/news/fra...e1b5ec3da.html

Excludes approve the opening Iranian banks in Iraq

Ruled out an official in the Iraqi Central Bank has been approved to open Iranian banks in Iraq.

Said Walid Idi Acting Director-General to monitor the banking central bank: it is unlikely that the Iranians want to get two banks to open branches in Iraq, government approval because of the sanctions imposed on Tehran over its nuclear program.

The central bank said last month that Iraq is in talks with six or seven foreign banks, including Iranian and Lebanese banks interested in the exercise of activities in the country.

Idi said that among the applicants bank Karavrin Barcan and Iranians who want to open branches in Baghdad showing view of new sanctions on Iran from the United Nations asked the CBI guidance from the Ministry of Foreign Affairs and the Council of Ministers. He has not made any agreement so far and Aatouka to approve the request from the Ministry of Foreign Affairs.

http://www.alsabaah.com/paper.php?so...age&sid=108272

Iraqi Politicians – Start Doing Your Jobs

Half a year after the Iraqi elections in March, the country is still without a government.

And in some quarters, there is no sign of urgency. Ayad Allawi, leader of the Iraqiya group, said during the week: “I hope in October some time, late October (things will be sorted out) … We are still in a preliminary stage.”

And he’s says this like it should be somehow reassuring, or even acceptable.

Clever tactics, such as keeping the Iraqi parliament session ‘open’ in order to postpone the deadline to form a government, only serve to erode people’s confidence in the process. Some claim it is actually unconstitutional to do this, but at the very least it is certainly not what was intended when the constitution was drawn up.

And while the game-playing continues, Iraq is suffering. As we reported on Monday, weak laws and regulatory problems are the main deterrent to business in Iraq. Despite UN sanctions, neighbouring Iran is getting three times as much foreign direct investment as Iraq.

Without a government to sort out these issues they will remain a major problem. Would it be too much to ask that Iraq’s politicians start doing what they are paid to do?

http://www.iraq-businessnews.com/201...ing-your-jobs/

Iraq cuts Kurdish fuel supplies by 50%

Iraq's oil ministry has cut supplies of some fuel products to the northern Kurdish region by 50% in response to the Kurds selling what they say is excess kerosene, fuel waste and naptha to Iran, Reuters has reported. The decision was ordered by oil minister Hussain Al Shahristani, ministry documents showed. "Based on instructions from the oil minister, it was decided to cut the allocation of kerosene and diesel fuel sent to provinces in the Kurdish region by 50% until further notice," one document said.

http://www.ameinfo.com/241707.html

New Iraqi Oil Prices for October

Iraq’s State Oil Marketing Organisation (SOMO) has raised the official selling prices for its Basra Light and Kirkuk crude grades for October loading to the U.S. and Europe.

In common with some other countries, Iraq’s oil is priced relative to regional benchmark prices:

* For shipments to US, contracts are priced are relative to the Argus Sour Crude Index (ASCI);

* Shipments to Europe are priced relative the North Sea Spot BFOE; and

* Asian shipmentas are priced relative to the Dubai-Oman crude benchmark, published by Platts, the energy-information division of McGraw-Hill.

October prices are as follows:

• Kirkuk crude to Europe increased the most, rising by $1.95 a barrel, and will sell at a premium of 15 cents a barrel to the North Sea (Dated Brent) benchmark;
• Basra Light to Europe will cost $1.50 a barrel more in October than in September and will sell at a narrower discount of $1.45 a barrel to Dated Brent;
• U.S. buyers will see a fifth consecutive price increase for the grade, with the discount to the ASCI narrowing to $1.15, an increase of 15 cents;
• Kirkuk oil for U.S. buyers will climb 10 cents a barrel to a 35 cents premium above the ASCI benchmark;
• The discount for Basra Light to Asia narrowed by 20 cents to $1.35 a barrel below the Dubai-Oman benchmark.

http://www.iraq-businessnews.com/201...s-for-october/

Council of Baghdad and the Iraqi trade constitute a committee to follow up the processing of "ration card"

The Board of Governor of Baghdad, on Wednesday, the formation of a joint committee with the Ministry of Commerce for follow-up processing and delivery of card items Altamonip to citizens by the Ministry of Commerce.

The Chairman of the Committee on the citizens of the Baghdad Provincial Council Salem Taher told Kurdistan News (Akanyuz) that "after the meeting, which included several members of the provincial council and a number of officials of the Ministry of Commerce decided to form a committee to monitor the processing and delivery of food to Iraqi citizens."

Taher pointed out that "the provincial council expressed its full readiness to support the Ministry of Commerce to overcome problems and obstacles encountered during processing."

Said Taher that "municipal and local councils of the Council of Baghdad, will open its doors to the citizens to make any complaint about the ration card items to be delivered to the Council to be discussed with officials of the Ministry of Commerce to be avoided in the future." explaining that "the provincial council demanded that the Ministry of Commerce to compensate citizens for cash for your articles They receive that are not included in the ration card materials."

And support Iraqi citizens as provide him with their ration card per month from essential food items since the start of the international embargo on Iraq in 1991 after its invasion of Kuwait, with an estimated value of these materials per capita in the local market about five dollars each, but the acute shortage of vocabulary ration card Happened after 2003 because of technical problems and process capabilities as well as the effects of the political situation and security in the country.

http://www.aknews.com/ar/aknews/2/180256/

Malaysian firm training Iraqi engineers as it gears to develop Gharaf oilfield

Malaysian state oil firm Petronas has agreed to train 60 Iraqi oil engineers to help it develop Gharaf oilfield.

The engineers will attend an intensive 6-month course in Malaysia and then sent back home to supervise the company’s operations.

Petronas and Japan Petroleum Exploration Co (Japex) have won a deal to develop the 900-million barrel field. They have agreed to invest about $7 billion.

Petronas has a 60 percent stake in the venture, and Japex the rest. The deal is a 20-year long term service contract.

Iraq has signed several such contracts with foreign firms in the hope of doubling its current output of about 2.5 million barrels a day.

But it is not yet known when the foreign majors winning the service contracts will start work in earnest. Security issues and instability are cited as among the main reasons for foreigners’ reluctance to start investing.

Under these contracts, the firms are entitled to get a remuneration fee ranging between $1-2 per every barrel extracted.

Petronas and Japex will get $1.49 per barrel from Gharaf the development of which could churn out 230,000 barrels a day.

http://www.azzaman.com/english/index...09-09\kurd.htm

Committee Set Up to Resolve KRG/Baghdad Disputes

The Iraqi government has formed a committee to discuss its numerous disputes with the Kurdistan Regional Government (KRG), AKnews reports.

Salam Yaseen, an economic adviser to the Iraqi government, told AKnews that the committee will discuss a range of issues with the Kurds including the oil and gas exports by the KRG that recently caused uproar in Baghdad.

The Kurdish and Iraqi governments have had deep disagreements for years over the management and control of oil resources in the country’s northern Kurdistan Region.
Recently disputes took another turn when the KRG announced the signing a new deal with the German utility company RWE to export gas to Europe.

He said the committee will soon start its work to resolve the differences over KRG’s gas exports.

Meanwhile, Iraq’s deputy oil minister told AKnews that so far oil and gas disputes between the KRG and Iraqi government have remained unresolved.

Assem Jihad said improving the relations between the KRG and Iraqi government will help increase Iraq’s crude oil exports.

The Iraqi government had already said some regional countries were trying to “complicate” the relations between the Kurdish government and Baghdad.

The Iraqi government has frequently objected to the oil and gas contracts between the Kurdish regional government and foreign firms saying it is a violation of the Iraqi constitution. But, Kurds insist that their contracts are constitutionally valid.

http://www.iraq-businessnews.com/201...hdad-disputes/

President of the industrial assembly of Iraq: Iraqi funds frozen in Iranian banks

The head of the Iraqi industrial assembly Abdul Hasan Shammari that Iraqi money frozen in Iranian banks after the UN Security Council imposed sanctions on Tehran, and urged not to deal with banks in the livelihood Aleranip present.

Al Shammari said in a statement published by news agency Wednesday that he would prefer not to deal with Iranian banks because most of the Iraqi funds frozen by the sanctions imposed on Tehran, noting that the sanctions have made money limit between the two countries.

He called Shammari not to introduce the problems of Iraq sanctions, Iran has suspended the United Arab Emirates to deal with 40 companies, noting that the countries of the world is linked to economic face another.

It was agreed that the UN Security Council on a resolution to impose further economic sanctions on Iran over its nuclear program.

http://radionawa.com/Ar/NewsDetailN....057&LinkID=155