Iraq

Currently, 54 banks operate in Iraq, of which 7 are state owned, 15 are foreign and 11 are specialized in Islamic banking services. As for branch network, Iraq currently has around ~ 920 bank branches across different governorates.

For deposits, state-owned banks control the majority of deposits in Iraq, with 100% of public sector deposits and 63% of private sector deposits. The situation for cash credit is not very different, with state-owned banks controlling 100% of public sector cash credit and 67% of the private sector’s cash credit.

There are several reasons that led to the domination of state-owned banks in Iraq, mainly the following

• Only state-owned banks can serve state-owned enterprises and government agencies.

• Payments to the government cannot be made by checks drawn on private banks.

• Deposits in state banks are implicitly perceived as government guaranteed.

• Private banks are held to a strict capital requirement whereas rules are less strict for state owned banks.

Foreign Banks: The main foreign banks operating in Iraq are either GCC banks, e.g. Abu Dhabi Islamic Bank (UAE) and Al-Baraka Bank (Bahrain), Iranian (e.g. Bank Melli Iran) or Turkish (e.g. Ziraat Bank, Vakif bank and Esh bank). The majority of the foreign banks in Iraq focus on the Kurdish Region.

Top Iraqi private banks generate most of their revenue from trade related activities and net interest incomeFor ATM machines, Iraq has the smallest ATM machine network in the MENA region, with less than 1 ATM machine per 100,000 inhabitants, compared to 32.7 as a regional average Also, most AMTs machines are not yet connected to a national switch, which makes it accessible only to the customers of the same bank only.

Kurdistan Region of Iraq

The banking sector in the KRI (Kurdistan Region of Iraq) has a limited role in business transactions, consequently, in economic development. This heavy reliance on cash limits opportunities for economic expansion. An efficient banking system needs interbank and government securities markets to provide liquid instruments for short-term investment. A lack of confidence in the banking sector is related to a loss of deposits under the former regime. While there is no short-term solution to reestablishing trust in the banking system, steps can be made to increase public confidence in the banking sector.

There are 49 banks operating in Kurdistan consisting of 43 private banks and six state-owned banks. Despite a large number of banks, the banking sector in KRI remains underdeveloped and has made a limited contribution to KRI’s economy.

Money transfer companies play a significant role in transferring money inside and outside Iraq. their profits are generally originate from money transfers and foreign exchange trading. the majority of locals hardly use banks for international transactions. keeping most of their funds in cash, other have relations with larger financial institutions as well as those whom their shareholders have personal connections.

Procedure of opening a bank account for foreign companies

1- Registration letter issues by Company Registrar.

2- Authorizations letter from Mother Company authorizing signatories and the limit of how much they can withdraw. Everything has to be translated to Arabic and legalized by Iraqi embassy and foreign minister (leave that to the lawyer).

3- KYC (Know your customer) form must be filled by the signatories foreigners need to provide their residency card and a copy of their passport

4- Iraqi banks need approval from Central bank and their headquarter in Baghdad

5- A request letter from the company addresses to the bank to open an account

6- A letter addressed to the bank requesting chequebooks

7- Company stamp

When it comes to wire transfers in/out the rates differ by the bank. Some bank will ask for supporting documents if the amount transferred exceeds a certain amount determined by the bank itself

The Same case applies to interest rate but not all the banks offer interest on a saving account.

List of recommended banks in KRI:

• TBI (Trade Bank of Iraq) – Waziran Neighborhood Opposite to Sami Abdulrahman Park, Erbil, Kurdistan Region of Iraq.
• BBAC (Bank of Beirut and the Arab Countries) – 60 M Road near Iskan intersection – Erbil, Kurdistan Region of Iraq.
• Byblos Bank – 60 M Road, near Iskan Intersection, Erbil, Kurdistan Region of Iraq.
• Blom Bank – 60 M Road, Near Iskan Intersection, Erbil, Kurdistan Region of Iraq.
• Kurdistan International Bank - Gulan Road, Erbil, Kurdistan Region of Iraq.