Iraqi Bank Reforms Tighten Governance, Drawing Gulf Investors to a $44 Billion Lending Market
Updated
Updated · Arabian Gulf Business Insight · Aug 10
Iraqi Bank Reforms Tighten Governance, Drawing Gulf Investors to a $44 Billion Lending Market
2 articles · Updated · Arabian Gulf Business Insight · Aug 10
Summary
Iraq has tightened governance rules for private banks, including a requirement for major shareholders to be qualified institutional investors, a shift that could force politically connected family-controlled lenders out over time.
The push targets weak transparency and compliance in a sector where public banks still dominate, holding IQD57.5 trillion of IQD73.2 trillion in cash credit and limiting competition in private lending.
Despite that imbalance, the market has room to grow: the sector’s loan-to-deposit ratio was 48% in 2024 versus a 75% regulatory ceiling, pointing to scope for more retail, corporate and infrastructure lending.
Asset quality remains a brake, with non-performing loans at 17% of gross lending in 2024, while corruption, debt-recovery weaknesses and political influence still raise risks for outside investors.
Gulf banks are seen as the likeliest entrants because they better understand those risks, but analysts expect gradual moves through minority stakes, trade finance and correspondent ties rather than a rapid expansion.