Abu Dhabi Islamic Bank (ADIB) will become the first Emirati bank with a presence in Iraq when it opens a branch in Baghdad next month. The company plans to open other branches across Iraq. "We'll have a branch in every major business city," said Hussain Qaragholi, a senior vice president at ADIB and the company's head of Iraq business.
Construction of the first Baghdad branch is under way, and the Central Bank of Iraq has given ADIB a preliminary licence. "The next branches we're looking for is Basra, Erbil, Najaf, Karbala, and eventually Mosul," Mr Qaragholi said yesterday at an Iraqi Business Council conference in Abu Dhabi. Iraq's banking sector continues to be dominated by public entities such as Rafidain Bank and Rashid Bank, as they control 85 per cent of the transactions in the country, while private banks account for 15 per cent. There are 36 local banks in the country, according to the Central Bank website.
Several foreign banks - including Capital Bank of Jordan, HSBC, National Bank of Kuwait and Ahli United Bank of Bahrain - have already set up in Iraq, but they have entered through partnerships with local banks. In the past, foreign banks shied away from opening branches under their own names because of security concerns. ADIB is only the second foreign bank to enter the market by starting a branch from scratch rather than through a partnership.
The first foreign bank to open a branch in Iraq was Byblos Bank of Lebanon, said Wassim Jazrawy, the head of Al Karmal Stock Exchange, a brokerage company in Baghdad. ADIB's entry into the market was "a good and timely decision", Mr Jazrawy said. The financial sector accounts for 80 per cent of shares traded on the Iraq Stock Exchange. Iraq's banking sector suffered from years of isolation during the rule of Saddam Hussein and still lacks strong links with the outside world.
Mr Qaragholi, an Iraqi-American, said bankers in Baghdad thought they could run the sector alone after the US invasion in 2003, but now realised the benefits of opening to foreign participation. ADIB planned to invest in power generation and oil services, he said. The property and manufacturing sectors are potentially attractive to investors, but accurate and detailed feasibility studies would be required, Mr Qaragholi added.
Foreign banks are hoping to capitalise on economic growth driven by rising oil production in Iraq. ADIB shares rose 3.2 per cent to Dh2.84 yesterday on the Abu Dhabi Securities Exchange. "The financial sector in Iraq is one that has remained in the shadows against the global financial crisis," Mr Qaragholi said. firstname.lastname@example.org