Private banks in Iraq struggle with liquidity shortages – Shafaq News

Shafaq News- Baghdad

Liquidity shortages at several Iraqi private banks have
weakened their ability to meet domestic and international obligations, as well
as requirements set by the Central Bank of Iraq (CBI), a banking source told
Shafaq News on Thursday.

The situation could lead to mergers among some banks, noting
that consolidation also aligns with banking sector reform efforts and
international standards, the source said.

Mergers involving troubled banks or those facing liquidity
shortages do not necessarily mean depositors will lose their money, as
financial obligations remain in place. However, recovering deposits may not be
as quick or straightforward as customers expect.

Addressing the liquidity shortage will require restructuring
the banking sector, strengthening confidence in banks, and improving their
ability to comply with regulatory and financial requirements, according to the
source.

Banking sources also told Shafaq News earlier today that
banks have begun implementing urgent compliance measures required to lift
restrictions on several lenders. The measures include stronger anti-money
laundering and counter-terrorist financing controls, tighter governance, closer
monitoring of US dollar transactions, and steps to curb smuggling and illicit
transfers. Employees at several banks said management had intensified the
process, with some staff working up to 12 hours a day amid mounting pressure to
meet the CBI of Iraq’s deadlines.

In April, the CBI directed several lenders to implement
stricter compliance measures, as part of efforts to lift restrictions on
affected banks and restore their access to international banking services.

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