"I will tell them in my presentation that they shouldn't worry. They should open accounts and letters of credit in these banks," he said.
Years of sanctions and wars have isolated Iraqi banks from the rest of the world, and they now lag behind developed and efficient banking systems.
However, Mr. Ibraihi said that the Central Bank is enforcing new measures that would enable these private banks to consolidate.
"If they cannot afford to raise their capitals to the level we want them to, they can merge together and make [a] few successful ... banks," he added. Capital could come from regional banks, in particular from Gulf States, as well as from some international banks.
Banks such as the HSBC Holdings PLC, Qatar's Ahli Bank, and Kuwait National Bank maintain large stakes in Iraq's banks.
International companies investing in Iraq are currently dealing mostly with a post-war-opened Trade Bank of Iraq, set up by the U.S. authorities in July 2003 to finance trade and reconstruction projects. The state-run bank's assets are expected to grow this year to $13 billion from around $10 billion a year earlier.
Iraq's two traditional state-run banks, Rafidain and Rasheed, cannot handle LCs and money transfer for customers abroad due to foreign debts that they need to meet first, Mr. Ibraihi said. Each of the two banks is popular inside Iraq and each maintains capital of at least $9 billion.
(Source: Wall Street Journal)