Positioning for peace: despite security fears, power cuts and border controls, international banks are eager to establish a presence in Iraq.(BANKING)(Industry overview)

Publication: MEED Middle East Economic Digest

Publication Date: 25-MAY-07

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COPYRIGHT 2007 MEED Middle East Economic Digest. All Rights Reserved.

It would be easy to assume that Iraq is a completely different environment for banks to operate in, compared with the rest of the Middle East. Yet some reassuringly familiar issues are at work.

The availability and training of a local workforce, and the development of mortgage and insurance markets, are affecting the sector throughout the region. In Iraq, however, the challenges presented by these issues are even more acute because of the additional dangers the unstable security situation presents.

"Security is an ever-present concern, and it does of course affect your ability to go out and look for business," says Chris Murray, director of operations in Iraq for HSBC. "At this point in time, it is not the easiest operating environment."

HSBC acquired a 70 per cent stake in Iraq's Dar Es Salaam bank in October 2005, in a deal that made it the most significant international bank to invest in the country Now, however, other banks are starting to look at the region. They are eager to enter the market in the hope of establishing a presence in the country that will give them an early advantage over any competition arriving after the security situation calms down.

Most of the large international banks operate in the...

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