According to a source who requested anonymity for security concerns, Asia Cell, one of the largest communications companies in Iraq, withdrew deposited money from its account at that same bank. The source told Al-Monitor that the bank still owes AsiaCell 200 billion dinars, an amount it is unable to pay, putting the bank on the brink of bankruptcy.
Awatef Jalloub, an economics professor at Baghdad University, told Al-Monitor that the solution lies in approving a new law that would help develop and support local banks, since current law does not allow them to be open to the international market.
She pointed out the necessity of encouraging banks to pair with international banks in order to create major development banks that are able to finance large projects in the country.
Meanwhile, Safwan Qassi, an accounting professor at Baghdad University, believes the answer to saving these stumbling banks lies in merging them with bigger banks or government intervention, whereby the government buys out these banks or takes on a role in managing them.
Speaking to Al-Monitor, Qassi noted that codifying customer payments, controlling withdrawals, imposing a certain exchange rate and forcing a change in currency are all factors that weaken the banks and undermine customers’ trust, which results in poor performance on the part of the bank.
(Banking image via Shutterstock)