Security is the largest concern. Baghdad remains riddled by checkpoints, monstrous concrete barriers and barbed wire. "It's a lot better than it was but security is still a major problem," concedes a senior American banker.
Iraq's convoluted, dysfunctional politics is another obstacle. While an Iraq Securities Commission has been established to regulate the capital markets, the law that spells out those regulations is still awaiting its turn in parliament - much like the long-delayed hydrocarbon law that has stymied the development of Iraq's oil industry.
Banks also run the risk of falling foul of Iraq's murky politicking, vividly highlighted by a scandal at the Trade Bank of Iraq, set up and assisted by a JPMorgan-led group of banks.
Hussein al-Uzri, the bank's founder and chairman, was this summer forced to flee the country after the authorities accused TBI of financial irregularities. Mr Uzri said the allegations were fabricated, and Sir Claude Hankes, an independent adviser to the bank, sent a damning open letter accusing prime minister Nouri al-Maliki of widespread "political corruption".
One senior investment banker says his institution is staying out of Iraq due to the "reputational risks" that can result from operating in the country.
Nonetheless, for many international banks contending with a bleak outlook in more traditional markets, Iraq's potential is simply "too big to ignore", says one senior banker.
(Source: Financial Times)
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