Move to Baghdad, Iraqi gov’t tells Turkish banks

Move to Baghdad, Iraqi gov’t tells Turkish banks

ISTANBUL - Hürriyet Daily News
Move to Baghdad, Iraqi gov’t tells Turkish banks

Turkish and Northern Iraqi top officials attend an opening ceremony of an airport in Arbil in this March 30 photo before they opened branches of Turkish banks there. AA photo

Turkish lenders operating in northern Iraq have been urged by the Central Bank of Iraq to start up main branches in country’s capital city Baghdad, according to the officials of the Turkish banks’ branches in Arbil.

The Central Bank of Iraq has sent written notification stating that Turkish banks were operating through branches on Gulan Street in Arbil, the capital of the Kurdistan Regional Government (KRG), according to a source from a lender who was speaking under condition of anonymity during a phone interview yesterday.

 “We already knew that when we opened the Arbil branch, we were obliged to open a main branch in Baghdad according to Iraqi laws,” said Özel Oto, general manager of İşbank’s Arbil branch told the Hürriyet Daily News.

Oto said the issue was not brought up due to the conflict between KRG and the Central Government of Iraq.

However, the source said the political conflict between the central and regional government escalated due to right of the oil and gas resources of the country and this underlies the latest push on Turkish banks “All the banks have started new plans of opening a main branch in Baghdad now according to the official notification from central bank,” the source added.

Plans for Baghdad branches

“We are planning to open a main branch in Baghdad on May,” said Oto. Among the largest Turkish lenders, İşbank, Vakıfbank and Ziraat Bank opened their first branches in Arbil in March 2011, with a ceremony, in which Turkish Prime Minister Recep Tayyip Erdoğan participated. Albaraka Türk and Bank Asya, leading providers of Islamic banking products in Turkey, which also plan to start up their first branches in the northern Iraqi city this year, will be obliged to open a main branch in Baghdad.
“We take the notification - from the Iraqi central bank - as a recommendation rather than an order,” said Yesur Meylani, the general manager of Vakıfbank’s Arbil branch. “We are planning to open a branch in Baghdad in addition to four other branches across the country in two years time.”

Meylani also said concern over the security conditions in the capital city was increasingly continuing. “If the security is sustained by the local authorities, our presence in the country will be easier,” he added.
 “Following a prior notification to and approval by the [Iraqi] central bank, the main branch may open additional branch offices in Iraq, provided that one branch is designated a main branch of the foreign bank in Iraq where any process may be served,” according the article 6 of the Iraqi banking law.

Turkey’s Economy Minister Zafer Çağlayan is set to start a two day official visit today to Arbil and Suleymaniyah, another northern Iraqi province, along with representatives from nearly 100 Turkish companies to discuss bilateral trade and investment relations with the government officials. Previously, Çağlayan said Turkey and the northern Iraqi administration were committed to increase the annual trade volume with northern Iraq to $20 billion.

Turkey’s bilateral trade volume with Iraq jumped by nearly 50 percent to $11 billion as of the end of the last year compared with 2010 and nearly 70 percent of bilateral trade was with the northern Iraq, according to official data.

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