Foreign banks given Iraqi permits

Foreign banks left Iraq in 1964

Coalition authorities have welcomed the Iraqi Central Bank's decision to liberalise interest rates and allow foreign banks back into the country.

"Iraqis can earn market rates of interest on their money and enjoy more modern banking," US civilian administrator Paul Bremer said.

Britain's HSBC and Standard Chartered and the National Bank of Kuwait (NBK) were granted licences on Saturday.

Foreign banks left Iraq in 1964 after the banking sector was nationalised.

HSBC, NBK and Standard Chartered Bank will start operations by the end of the year.

Competition

They were selected from 15 applicants which included banks from across the Middle East.

The 15 foreign banks which applied pledged to keep a minimum of $25m in Iraq.

"Iraq is definitely very interesting. We are talking about billions. They need everything, including capital and every type of finance. Everyone is trying to get in one way or another," Joe Sarrouh, executive adviser at Beirut's Fransabank reportedly said.

Standard Chartered, which has been increasing its presence in the Middle East, has branches in Jordan and Lebanon.

HSBC operates in 12 Middle Eastern countries, while the National Bank of Kuwait is a leading financial institution in the Gulf. Other banks may be granted permits in the future, Iraqi officials said.

Private Iraqi banks were permitted to open in the 1990s to ease harsh conditions created by the UN's sanctions.