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KTFA
The paper obligates all private banks to increase their capital to 400 billion dinars and pay an annual fee of $2.4 million for four years, or opt for a merger and define ownership and management structures with several controls, including reducing the percentage of “relatives” in the new structures to just 10% and paying $1.3 million annually.
These controls may not be implemented by bank owners during the short remaining period, which ends on August 31, according to economic expert Mustafa Hantoush. Hantoush believes that the banking reform paper will be subject to “flexibility” in terms of time, so that it can be implemented within months or a year, according to the Central Bank’s estimate. Hantoush, however, rules out the possibility of liquidating banks subject to US restrictions and sanctions, with the exception of some banks that have already declared bankruptcy.
Mustafa Hantoush, in an interview with journalist Qais Al-Murshid, followed by the 964 network:
The banking system was easy and not built on risk tolerance, as it did not delve deeply into banking operations. Instead, it relied on massive trade requiring dollar transfers, which generated large and rapid profits for many banks.
Oliver Wyman, an American consulting firm, was contracted by the Central Bank to conduct a study on the reality of the Iraqi banking sector, along with consultations and reform plans.
The firm completed its study and submitted proposals last April, which were translated into actual decisions two weeks ago.
Banks will be required to sign a pledge or contract requiring one of two options by the end of this month at the latest.
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The first is to increase the banks’ capital to 400 billion dinars, with an annual payment of $2.4 million for a period of four years. The second option is to merge with other banks, setting the ownership structure at 10% for relatives and the remaining percentage for other partners, with an annual payment of $1.3 million for a period of four years.
The hope is to implement one of the two previous options, with certain required criteria, and exit the US sanctions list. Otherwise, the third option is liquidation.
I believe the reform plan proposed by Oliver Wyman and adopted by the Central Bank will see some flexibility in implementation.
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