The Trade Bank of Iraq will continue to abide by US and UN
sanctions against Iran, its president and chairman said
Hussein Al-Uzri told Emerging Markets in an
interview that TBI, which last year issued letters of credit
(LCs) worth $9.5 billion, was in close coordination
with the US Treasury.
Iraq is Irans second-largest non-oil export market,
with estimates of total trade between the two neighbours put as
high as $5 billion.
Proponents of tougher sanctions against Tehran argue they
would curb the Islamic Republics nuclear ambitions, and
the US treasury already discourages European banks from
involvement in the Iranian market.
Al-Uzri conceded however that although state-owned TBI has
Iraqs primary responsibility for financing trade through
LCs, the bulk of non-oil trade with Iran was financed through
money-brokers. This is a very old tradition and will not
change quickly, he noted.
Despite the difficulties of its operating environment
including security issues and corruption, as well as tensions
between Washington and Tehran TBI is reporting
encouraging figures, Al-Uzri said.
Although oil revenue in the country has declined
[since 2008], we will issue more than $10 billion in LCs this
year, he said. We have $13 billion on our balance
sheets. Our profit last year was $359 million, which is money
we retain, it does not go back to the
These figures were important in fostering the development of
private banks. For them to prioritise us with lines, they
like to see a healthy balance sheet, he said.
Iraq is underbanked, he added. Yet
the country is launching big [reconstruction] projects, and you
need to be adequately capitalised to do this. We need a few
banks the size of TBI ... not just one.
Private banks had minimum capitalisation even after a
recent increase of just $86 million, he added, and
foreign banks that had opened were reluctant to expand.
But Uzri said he was encouraged by the number of LCs now
being issued by private banks, which now made up 65% of
government LCs. We have developed the private banks
relations with our own 127 corresponding banks: previously many
of them were limited in their [international] dealings.
TBI would continue to prioritise the energy sector, he added,
citing its role in power plants in Erbil and Suleimania.
While Al-Uzri stressed that security was Iraqs
top priority, it had improved greatly since
2007. Progress towards a vibrant private sector as the
primary engine of development had been far slower than hoped,
Al-Uzri said. But he argued that the government was committed
to fostering the private sector and to diversifying its own
income away from oil, which accounts for 85-90% of government
revenue in 2009.
Al-Uzri also praised the Iraqi central bank for maintaining
reserves of around $40 billion and refusing to use them for
[politicians pet] projects.
Compare this situation with what there was under
Saddam, when the national budget was a state secret, he
said. Now good laws [on banking and investment] have been
passed, and there is a thorough process of tendering.
Al-Uzri left Iraq in 1977, attending high school in Beirut,
and then living in the US and Russia. A grand-nephew of Ahmad
Chalabi, the Iraqi politician, he was appointed president of
TBI when it was set up in 2003 under the US-led Coalition