Wednesday, Apr 11, 2007
By Hassan Hafidh
Of DOW JONES NEWSWIRES
AMMAN (Dow Jones)--The Trade Bank of Iraq said it has issued import letters of credit worth $18 billion since its establishment three and half years ago, securing guarantees for firms seeking postwar rebuilding deals and exports to the country after decades of international isolation.
Bank President Hussein al-Uzri told Dow Jones Newswires in a recent interview in Amman that the bank had made a total net profit of $120 million since it began operations in December 2003 to the end of 2006. Uzri said that the profits made by the bank over the last three and half years bring its total capital to $220 million.
The bank's net profit in 2006 was estimated at $60 million, according to Zaid Mahdi, a senior bank official. The last full financial report available is from 2005. The bank has also financed small, medium and large commercial projects in Iraq, lending a total of around $250 million, Mahdi said.
The TBI is an independent Iraqi government entity created to facilitate the reconstruction of Iraq by providing trade finance services that Iraqi financial institutions are currently unable to offer. The bank also helps Iraq import equipment and critical supplies ranging from medicines and food to oil products.
Although the Central Bank of Iraq authorized the country's private banks, now numbering 27, to handle international payments and foreign currency letters-of-credit in late 2003, local banks lack an effective cross-border payment capability, Iraqi bankers said. Furthermore, most of these institutions are relatively small and can support limited amounts of commercial trade business, they added.
Uzri said the bank has five branches, two in Baghdad, one each in Erbil and Suleimaniya in northern Iraq and one in Basra in the south. It is planning to open more branches in other Iraqi cities when security improves, he said.
The bank, established by the dissolved U.S.-led Coalition Provisional Authority in July 2003, two months after the U.S.-led invasion, provides a critical payment mechanism for Iraq's procurement needs.
An international banking consortium led by JP Morgan Chase & Co. (JPM) has assisted in the development and operation of the trade bank by providing banking knowledge, systems capabilities and operational support to the Iraqi-staffed institution.
"We have a contract with JP Morgan to confirm the LCs that we are issuing and to train our staff," Uzri said.
In October 2006, Citigroup Inc's (C) Corporate and Investment Banking division, in cooperation with Overseas Private Investment Corporation, or OPIC, announced the launch of a $70 million structured credit facility that would enable the TBI to issue letters of credit that would be confirmed by leading financial institutions. OPIC is an independent U.S. government agency that facilitates the participation of U.S. investment in emerging markets.
Uzri said that the TBI maintains trade relations with 60 banks around the world. He said the bank is also holding talks with the World Bank and with OPIC to finance small, medium and large projects in Iraq.
-By Hassan Hafidh; Dow Jones Newswires; + 962 777 612 111; hafidh8@hotmail.com
(END) Dow Jones Newswires
11-04-07 1108GMT
