The Trade Bank of Iraq (TBI) has doubled the maximum value of letters of credit (LC) that it allocates to the country’s private banking sector.
The LCs increased in top value from up to US$2mn to US$4mn in response to a strong increase in demand for cross-border trade finance.
The shift will enable 18 private banks to increase the size and range of business activities they finance, with the number of Iraqi banks involved in the scheme expected to increase.
This comes after TBI issued nearly 1000LCs to private banks last year for a value of approximately US$500mn.
In total, TBI has allocated almost 2,500 LCs equalling around US$3bn.
The bank cites the return of widespread stability to the country, plus developments such as the successful issuance of oil licenses, as a contributor to the decision.
TBI’s chairman, Hussein Al-Uzri, says: “The bank has the strong capital base and the expertise to help the private banks to expand this important line of business at a time when demand for trade finance is rising fast.
“We have always been prudent in determining credit limits and are confident that the increase limit prudently matches the revival in credit appetite. We are proud to be a catalyst in the regeneration of the banking system in order to finance and facilitate Iraq’s re-emergence as a major regional and international economic power.”
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