June 1st, 2011 08:11 am ·
The Central Bank of Iraq (CBI) and the Ministry of Finance indicated that the restructuring of the balance sheets of the two largest state-owned banks, Rafidain Bank and Rasheed Bank, will be completed at the end of June 2011.
The restructuring plan is being implemented by a Bank Reconciliation Unit (BRU), chaired by the CBI, with the participation at a technical level of staff from the CBI, the Ministry of Finance and other stakeholders. The BRU’s objectives are to deal with the legacy assets and liabilities of the previous regime to identify and propose to write-off non-performing loans to defunct state-owned enterprises to propose a course of action for other remaining un-reconciled accounts and to revalue the remaining foreign currency denominated balance sheet items.
In parallel, the Finance Ministry said it will continue to modernize the two banks by moving ahead with the plans for their operational restructuring, so they can operate on a fully commercial basis and on market terms, and the government will refrain from directing any lending.
It added that the decision to recapitalize Rafidain and Rasheed will not be made until the restructuring of their balance sheets has been completed and adequate progress has been made in their operational restructuring, especially by establishing an appropriate governance structure and strengthening risk management and control tasks.
