The Trade Bank of Iraq (TBI) has doubled the maximum value of Letters of Credit it allocates to the private banking sector in Iraq.
Last year alone 945 Letters of Credit were allocated to private banks, at a value of approximately $500m. The total number allocated to private banks by TBI is 2,446, at a value of about $3bn.
In response to a strong increase in demand for cross-border trade finance , TBI has increased the value of each Letter of Credit from a value of up to $2m to a new maximum of $4m.
This will immediately free 18 private banks to increase the size and range of the business activities they finance for their clients. The number of Iraqi banks involved in the scheme is also expected to increase.
The return of widespread stability to the country, plus developments such as the successful issuance of oil licences, has put Iraq back on the path to economic growth and business expansion.
Hussein Al-Uzri, Chairman of TBI, said:
“The Bank has a strong capital base and the expertise to help private banks to expand this important line of business at a time when demand for trade finance is rising fast. We have always been prudent in determining credit limits and are confident that the increased limit prudently matches the revival in credit appetite.”
“As well as allocating Letters of Credit we are providing a training programme to enable each local bank to develop its own in-house ability to arrange cross-border business. TBI is also helping them to develop their own working relationships with our large and growing number of international correspondent banks.
“We are proud to be a catalyst in the regeneration of the banking system in order to finance and facilitate Iraq’s re-emergence as a major regional and international economic power.”