Citigroup Inc. said it plans to open a representative office in Baghdad after getting approval from the country’s regulator, making it the first American bank to have a physical presence on the ground there.
Citi said it obtained preliminary approval from Iraq’s central bank to establish a Baghdad office. Until now, Citi served its Iraqi clients through its office in Jordan’s capital Amman. The lender is looking to open two more representative offices in Erbil and Basra at a later stage.
For Citi, Iraq represents the first new country it has expanded into since 2007, and the move is a show of confidence in Iraq’s economic prospects.
“Our economists have forecast that by the year 2050, the Iraqi economy should be in the neighborhood of $2 trillion with a 50 million population—that is an economy which is compelling,” said Dennis Flannery, who will be heading up the new office. He joined Citi in 2011 from the U.S. embassy in Baghdad.
Citi is mostly active in Iraq through cash management and trade finance to multinational companies, including several major oil groups. But the bank is also looking to play a role in financing the rebuilding of Iraq’s infrastructure, part of which was ravaged following the U.S.-led invasion of the country in 2003.
Citi isn’t the first foreign bank to establish a physical presence in Iraq. Regional banks from the Persian Gulf and Lebanon were relatively quick to set up shop in the war-torn country in recent years. For international banks, the picture is mixed. HSBC Holdings PLC may be selling its holding in a local bank and exit Iraq, while Standard Chartered PLC is looking to open three new branches. Other lenders remain on the sidelines for now, waiting for the security situation to improve before forging ahead with expansion.
“We expect prosperity coming to Iraq and we hope that as prosperity comes to the country some of the political and security issues might be abated,” Mr. Flannery said. Citi will be operating representative offices in Iraq and not actual banking operations, which means, for example, that the bank won’t have to worry about providing security to money transports between branches.
Elsewhere in the Middle East, Citi has a presence in the United Arab Emirates, Bahrain, Qatar, Kuwait, Egypt and Lebanon.
Source: Wall Street Journal