Iraq halts purchase of Turkish bank after lira plummets

ERBIL (Kurdistan 24) – The state-owned Trade Bank of Iraq (TBI) has halted plans to buy a commercial bank in Turkey due to the lira crisis, said its chairman on Wednesday.

TBI, owned and operated by the Iraqi federal government and with assets of nearly $20 billion, is responsible for helping finance around 80 percent of the trade finance business in Iraq. The bank has plans to expand its footprint into the neighboring country of Turkey, Iraq’s largest trading partner, Faisal al-Haimus said during an interview with Reuters.

However, the Turkish currency has lost more than 40 percent of its value against the US dollar in 2018, with the most dramatic drops in value occuring in the past week. Investors have voiced deep concerns about the current economic policies of Turkish President Recep Tayyip Erdogan and diplomatic tensions between Ankara and Washington.

“Turkey is a very important market for Iraq, and we want to study the situation before entering Turkey,” Haimus said. “The Turkish lira is not stable, and we are watching to see if it stabilises before entering.”

He stated that TBI’s preferred entrance to the neighboring country was through an acquisition, and TBI had been approached about buying a Turkish commercial bank. He did not reveal the name of the bank, but mentioned that TBI’s board was assessing the potential purchase without elaborating further.

“A commercial bank would act as Iraq’s trading leg in Turkey and facilitate exports from Iraq to Turkey,” he said, adding that trade between the two countries had reached around $6 billion so far in 2018.

TBI also aims to open a branch in Saudi Arabia after receiving approval in July for such a move from the nation's Council of Ministers, over which Iraqi president Haider al-Abadi presides.

“At this point in time trade (between Iraq and Saudi Arabia) is around $1 billion and the aim is to double or triple that in two or three years,” Haimus said, noting that food and agricultural products and petrochemicals were among the areas primed for growth.

He added that TBI also has a representative office in Abu Dhabi, which it plans to upgrade to an asset management business to provide investment opportunities in Iraq for high-net-worth individuals in the Gulf.

Editing by John J. Catherine