Iraqi Banks undertake Overdue Reforms

By Omar al-Jaffal for Al Monitor. Any opinions expressed here are those of the author(s) and do not necessarily reflect the views of Iraq Business News.

Iraqi Banks undertake Overdue Reforms

The Central Bank of Iraq (CBI) announced in a statement Dec. 19 the devaluation of the Iraqi dinar to 1,450 to help reduce the country’s fiscal deficit in the state budget for 2021 from 70 trillion to nearly 30 trillion dinars.

Simultaneously, Iraqi banks have undertaken additional measures to optimize the Iraqi economy. In the past weeks, government banks intensified calls for citizens to deposit their money in their bank branches instead of hoarding it at home.

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NBI takes over Bank Audi's Iraqi Branches

Capital Bank and Bank Audi Sign Definitive Agreements for the Sale of the Assets and Liabilities of Bank Audi Branches in Jordan and Iraq

Capital Bank Group and Bank Audi Group have announced the signing of the definitive agreements for the acquisition by Capital Bank of the operations of Bank Audi’s Jordan Branch Network, and the acquisition by the National Bank of Iraq – a subsidiary of Capital Bank Group – of the operations of Bank Audi’s Iraq Branch Network, including the purchase of the assets and liabilities of these branches.

The completion of these transactions remains subject to the receipt of the final approval of the related supervisory and regulatory authorities.

The agreements were signed by H.E. Mr. Bassem Khalil Al-Salem, Chairman of Capital Bank Group, and Mr. Samir Hanna, Chairman and Group CEO of Bank Audi, who both confirmed that the acquisitions were achieved after an in-depth due diligence exercise conducted in accordance with the applicable legislations, and after obtaining the preliminary approvals of the Central Bank of Jordan and the Central Bank of Iraq.

Al-Salem stated on this occasion that:

This agreement is in line with Capital Bank’s expansion strategies regionally and locally, ultimately strengthening its competitive position. This acquisition is a first in the Iraqi banking sector, and will only serve to support the National Bank of Iraq even further.

“The move will also enhance the steadfastness of Capital Bank Group’s financial indicators, allowing it to continue providing innovative and efficient banking services to corporate and individual customers, as well as the continued development of products and solutions supported by the Bank’s bold digital transformation policy.

Commenting on the agreement, Hanna explained that:

These transactions further reinforce our Bank’s role in facing the considerable challenges Lebanon has been exposed to for over a year now.

“The selection of Capital Bank as exclusive bidder on this transaction was made taking into account the business continuity of Bank Audi’s entities in Jordan and Iraq, and the interests of their stakeholders, employees and customers alike, in addition to the beneficial impact which the transaction is expected to have on their future business development.”

In turn, Mr. Dawood Al Ghoul, Capital Bank’s Chief Executive Officer, assured that all of Bank Audi client’s accounts would be retained along with its staff. “We will honor all commitments towards clients that were contracted by Bank Audi’s units in Iraq and Jordan as they are“, he said.

Both Messrs. Al Salem and Hanna seized this opportunity to thank the Central Bank of Jordan represented by its Governor, H.E. Dr. Ziad Fariz Al Akram, the Central Bank of Iraq represented by its Governor, H.E. Mr. Mustafa Ghaleb, as well as the Central Bank of Lebanon represented by H.E. Governor Riad Salameh, and their deputies, for their unwavering support of the operation.

Pursuant to these agreement, Capital Bank Group acquires the operations of Bank Audi – Jordan Branch Network and Bank Audi Iraq Branch Network encompassing14 branches in Jordan and 5 branches in Iraq, which brings the total number of Capital Bank’s branches to 28 in Jordan and the total number of National Bank of Iraq’s branches to 18.

At end-September 2020, Bank Audi’s assets in Jordan reached JD 506 million, while those of its Iraq branches reached IQD 275 billion. Accordingly, these acquisitions will contribute to increasing the consolidated assets of Capital Bank to JD 3.6 billion, while its shareholders’ equity will reach JD 400 million.

The acquisition of Bank Audi’s operations in Jordan and Iraq falls within Capital Bank Group’s development and expansion strategy, as well as within its plans to develop its digital performance and transformation, which guarantees the highest levels of speed, accuracy and customer satisfaction.

(Source: Bank Audi)

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Price Hikes follow Iraqi Dinar Devaluation

From Rudaw. Any opinions expressed are those of the author(s), and do not necessarily reflect the views of Iraq Business News.

Price hikes at Sulaimani market following dinar devaluation

Traders in Sulaymaniya (Slemani) say the devaluation of the Iraqi dinar is driving up prices for local shoppers.

Click here to read the full story.

(Picture credit: Layth Mahdi)

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Iraqis Protest against Dinar Devaluation

By John Lee.

Rudaw reports that hundreds of people protested in Baghdad’s Tahrir Square demanding that the government reverse its decision to devalue of the Iraqi dinar against the US dollar.

According to The Arab Weekly, the devaluation sparked panic across the country, as people rushed to buy dollars or stock up in supermarkets before price rises took effect.

More here and here.

(Sources: Rudaw, The Arab Weekly)

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Iraq Dinar Devalued by approx 20%

By John Lee.

Iraq has reportedly devalued its currency by about 20 percent against the dollar.

According to Bloomberg and The Arab Weekly, the Central Bank of Iraq (CBI) has reduced the official rate to 1,450 dinar per US dollar.

The previous official rate was 1,182 dinar to the dollar.

Reuters adds that the decision came as a preemptive move to prevent “draining Iraq’s foreign reserves” and help government to secure public servants’ salaries.

Riot police were reportedly sent to protect the central bank HQ in advance of the annoucement.

More here, here and here.

(Source: Bloomberg, Reuters, The Arab Weekly)

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Iraqis Panic as Leaked doc signals Dinar Devaluation

A leaked draft of Iraq s state budget sent Iraqis into a panic on Thursday as it confirmed the government’s intentions to devalue the national currency the Iraqi dinar [IQD], and cut salaries to cope with the impacts of a severe economic crisis.

Click here to read the full story from The Independent.

(Source: The Independent)

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Moody's announces Periodic Review of Iraq's Ratings

By John Lee.

Moody’s Investors Service has said that Iraq’s credit profile (issuer rating Caa1) “is supported by the country’s ‘ba2‘ economic strength … its ‘caa3‘ institutions and governance strength … its ‘ba3‘ fiscal strength … and its ‘caa‘ susceptibility to event risk“.

The company made the announcement on Monday following its periodic review of ratings.

More here.

(Source: Moody’s Investors Service)

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Iraqi Dinar Falls in Value

By John Lee.

Dinar value falls as Iraq contemplates currency devaluation

MPs say Iraq’s 2021 budget is likely to bring a significant drop in the value of the dinar, helping the government’s balance sheet but hurting the purchasing power of most Iraqis.

More details here from Iraq Oil Report (subscription required)

(Source: Iraq Oil Report)

 

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Iraqi MP says Govt to Devalue Dinar

By John Lee.

A member of Iraq’s Parliamentary Finance Committee has reportedly confirmed the government’s intention to devalue the Iraqi dinar.

MP Jamal Kocher told Shafaq News Agency:

I think that there is a government tendency to create an atmosphere for raising the dollar exchange rate more than it was in previous budgets … The government must take these steps. Otherwise, there will be a huge deficit.

More here.

(Source: Shafaq)

See also:

Experts discuss fate of the Iraqi Dinar

Report warns of Possible Collapse in value of Iraqi Dinar

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