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Iraq’s Central Bank Issues Guidelines on Banking Licenses

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The Central Bank of Iraq (CBI) has released new guidelines outlining the requirements for establishing and operating banks in the country. The regulations aim to promote stability and transparency in the banking sector.

Requirements for Establishing a Bank in Iraq

According to the CBI’s guidelines, establishing a bank in Iraq, including as a subsidiary of a foreign bank or bank holding company, requires prior issuance of a banking license by the CBI. Similarly, setting up a branch or representative office of a foreign bank in Iraq necessitates a permit from the CBI.

Minimum Capital Requirement

The CBI has stipulated that subsidiaries of foreign-owned banks must have a minimum capital requirement of 50 billion dinars, with no restrictions on where this capital can be invested.

Requirements for Licenses and Permits

  • Licenses and permits will only be granted to companies established as juridical persons in accordance with Iraqi law and registered accordingly.
  • Such companies may be wholly or majority-owned subsidiaries of foreign banks or bank holding companies.

Regulations on Foreign Ownership

The CBI has introduced measures to regulate the activities of entities performing micro and small business credit access or similar grant programs, which are exempt from the application of this law. These entities must provide notice and periodic reports to the CBI concerning their exempted credit access and grant programs.

Requirements for Company Registration

For a company established in Iraq, the application for a license must include various documents and information, such as:

  • Authenticated copies of the instrument under which the applicant is formed
  • Amounts of authorized and subscribed capital
  • Details on administrators and owners of qualifying holdings
  • And more

Foreign Ownership Restrictions

According to Article 4.6, the total number of licenses for banks controlled by foreign persons is limited to six banks until December 31, 2008. After that date, there will be no limit.

Key Takeaways

  • Establishing a bank in Iraq requires prior issuance of a banking license from the CBI.
  • Subsidiaries of foreign-owned banks must have a minimum capital requirement of 50 billion dinars.
  • Licenses and permits will only be granted to companies established as juridical persons in accordance with Iraqi law and registered accordingly.
  • Foreign persons can own shares in Iraqi banks, but are subject to certain conditions.

Source: Central Bank of Iraq (CBI) Guidelines on Banking Licenses.