Banking on security in Baghdad

By Mohammed Abbas
BAGHDAD (Reuters) - Under the watchful eye of a guard in army fatigues -- with badges depicting a dagger through a skull -- the meeting of the Iraqi private banks association was like any gathering of mostly fat and balding money men.
Observed by the guard clutching a rifle in the corner, men in suits argued about how to encourage growth in Iraq`s long-moribund finance sector, where the "green shoots" of security have drawn bankers out from behind the barricades.
"The security now is better than one or two years ago ... I go out as an Iraqi citizen because I`m proud of my country, regardless of bombs or terrorism," said Abdul-Hussein al-Rabaie of Iraq`s Al-Bilad Islamic Bank for Investment and Finance.
Happily for the men at the heavily guarded meeting -- bankers are prime kidnap targets in Iraq -- their patriotism has coincided with bumper profits.
Bankers at the get-together spoke of a surge in deposits and loans in the past two years as the violence that gripped Iraq after Saddam Hussein`s fall in 2003 began to subside, revenues from record oil prices flowed in and government salaries rose.
Banks are among the top picks on Iraq`s nascent bourse.
Total bank deposits in February -- the latest figures available -- jumped by half to 36.6 trillion Iraqi dinars ($31 billion) from a year before, and loans surged 65 percent to 5.1 trillion dinars over the same period, central bank data show.
The figures are tiny by international standards, but even global banking giant HSBC sees bigger things to come in Iraq, home to the world`s third-largest oil reserves and desperate to rebuild after years of war.
"You have a country with an infrastructure largely in tatters, and tremendous potential in oil and gas," HSBC Bank Middle East Ltd chairman Youssef Nasr told Reuters by telephone from Dubai.
Through its 70 percent stake in Dar es Salaam Bank, which has a capital of 50 billion Iraqi dinars ($43 million), HSBC is one of the few foreign lenders with a presence in the country and is considering expanding along oil export routes.
Like other banks, HSBC shut some of its 14 branches after sectarian violence made parts of Iraq no-go zones.
"Now all branches are open or plan to reopen," Nasr said.
BRAVE BANKERS, COWARDLY CAPITAL
Bombings and shootings are still common in Iraq, and in a booth outside Warka Bank for Investment and Finance in Baghdad`s fortified Green Zone a guard routinely asks customers to hand over their weapons before entering.
Administrative chaos is also still evident at Iraq`s two main state banks, Rafidain and Rasheed, where on pension payment days harassed clerks using ledgers and antiquated equipment struggle to restore order to a clamoring crowd.  Continued...
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