The Coalition Provisional Authority (CPA)
has issued a Request for Information (RFI), inviting proposals for assisting
in managing Iraq’s two largest commercial banks – Rafidain Bank and Rasheed
Bank. The aim is to help both banks to restructure in order to become
commercially viable entities able to operate successfully within a market
economy. “It is important that Iraq’s banks help to create the economic
growth that Iraq needs,” stated Peter McPherson, the CPA’s Director of
Economic Development. “This decision is a step in that direction.”
Under Iraq’s previous regime, Rafidain and Rasheed banks operated under
the direct control of the country’s political leadership, extending resources
to public enterprises and supporting projects favored by Baath Party officials.
Despite many well-trained and highly-capable staff, the banks’ international
isolation, and the level of government control over them, have undermined
their technical capacity to operate based on sound credit policies, while
their asset/liability management practices has been significantly weakened.
The Request for Information seeks expert views from global financial
and management entities interested in helping to manage the Rafidain and
Rasheed banks through management contracts. The RFI is specifically directed
toward institutions with sufficient size and strength to undertake these
contracts themselves. Expressions of interest will be evaluated by the
CPA and the Governing Council.
Among the issues to be addressed in the RFI are: the development of a
new business strategy for each bank; the prioritization of key reforms
needed; creation of a “good bank/bad bank” structure at each bank; methods
to encourage small and medium-enterprise lending, and the development
of new bank lending and borrowing instruments suitable to Iraq’s economy.
This RFI is part of a wide-ranging economic reform program in Iraq aimed
at: (i) modernizing the country’s financial system, (ii) building a new
foundation for Iraq’s banking system based on sound market principles,
(iii) fully implementing measures among Iraq’s banks that are consistent
with international best practices in all aspects of commercial bank operations,
and (iv) allowing Iraq to realize its unique potential for economic growth
to the greatest extent possible.
Additional details can be found at www.cpa-iraq.org.