The role of governance in financial market reform

Berlin-downloads
Date posted 01/07/2012 12:00 AM
Study in Berlin Summit

The strengthening of the role of corporate governance in the financial market reform, along with a sample of Iraqi banks, both nemesis Summit Bank Arabic international 2012 which ended in Berlin (Germany) in late June.



Participants in the Summit organized by the Arabic Bank Union and participated in delegations representing Arabic and global banks and paying special attention to experts study by Dr. Sadeq Rashid Al-shammari, Managing Director of the Islamic National Bank and a member of the International Federation of Arab bankers, as they deal with the Arab banking sector and the economic and financial crisis affecting the sector at the global level, and bring banks Arabic measures to fortify against its aftermath.

Study concludes an important point is that the serious economic and financial developments taking place in the world and rapid, in depth in the economies of many States and have cast a shadow over the future of the international economy and, at the same time was devoted to the concept of globalization that has spread at all levels, funding, administrative, productive and financial, as numerous types and areas of application.

He says Shammari said the developments and changes and the implications of globalization left-reaching consequences for the banking sector in the countries of the world, including Arab countries, especially in relation to the growing trends towards deregulation and the removal of obstacles legislative and regulatory prevent the expansion of these institutions in their various activities, especially in the framework of the Convention World Trading imposed a lot of obligations on States in this area,

pointing out that most economists and politicians have been busy for four years before the effects of the disastrous financial crisis that brought the impact of the collapse of the «Lehman Brother» and the consequences that resulted from the collapse, which still continues, affecting large segments .

On the economic front, for example, decline in the rate of economic growth in the world significantly to low levels, especially in the countries of Europe, while able to developing countries including Arab countries achieve the levels of good growth compared to European countries, albeit at levels less than it was before the crisis, because of financial surpluses accumulated proceeds from the sale of oil.

It is noted Shammari in the study that the global financial crisis have left devastating consequences, especially in the financial sector did in the sector since the Depression in 1929, since this crisis resulted in imbalances at the economic, social and political as the impact on the environment of the global economy, and led eventually to the disruption of a large in the commercial and financial transactions.

With regard to Iraqi banks, the study concludes that while Al-shammari, the depth of the historical development of the banking sector due to its infancy the 1920s, however, the role of private banks in particular Iraqi banks remains very limited, for financial reform in Iraq has seen remarkable developments related to the strengthening and enhancement of its role and the governance of the banks have not seen her presence not only in terms of depth of understanding and applying appropriate practices, for strengthening the financial market.

Andrew believes that the governance of banks means many things to many people, as it is an important subject and vital in the process of providing prevention against corruption and mismanagement, and at the same time to promote the values of the free market economy to the growing number of corporate shareholders and lenders.

The study included an important aspect, which topped the discussions of the summit of the bank doors, and several chapters on the importance and objectives of the reform of corporate governance of banks in the financial market as well as an overview of the emergence and development of the Iraqi banking system between year 1934 and 2012.

And stop a door at the Iraqi private banks that have been developed a broad program of activity leading what is in the promotion of interest in the subject of corporate governance of banks and financial institutions for his role in the promotion of free market economy and the prevention of corruption and poor governance, transparency and disclosure and the application of governance mechanisms internal, especially that of governance are necessary and inherent to financial activity in the world

It said: The Iraqi banks current are governed by the need for methods and formulas to avoid the dangers of credit properly and adhere to international standards, which is essential for the health of the economy, so that the reality of private banks, although its development and increase in number, refers to the lack of knowledge Balyatea with many banks, as well as the absence of the strategic dimension of management orientation to avoid the dangers banking, so the Iraqi banks are called upon to make extraordinary efforts to build capacity and provide new technologies, and development of payment systems and control, which will lead to increase profitability and reduce the proportion of bad debts.

Shammari also points to the importance of developing human resources for the sector and the provision of professional staff required for the development of the banking industry for the next stage.

Al-shammari was presented in his statements by Iraqi banks Association on several banks until June 2011 and is 49 banks broken down as follows:

1-32 of 9 communal banks Islamic banks and the rest commercial banks, in addition to Government and commercial banks 7 specialist with 10 branches of foreign banks and their subsidiaries totalling over 900 of which 503 branches of branch banks throughout the country eligibility

2. seven shares of foreign banks (Jordanian and Kuwaiti and Gulf and British) in the capital, Iraqi banks and participation rates ranging from 49 percent and 85 percent of the capital.

3. the balance of the total assets of the Iraqi banking sector at the end of the year 2010 about of 363, 3 trillion dinars, the equivalent of 310 billion dollars by the Central Bank of Iraq, compared with $ 285.6 billion at the end of the year 2009 and the growth rate of approximately 8.8 percent and ranks third after Saudi Arabia and the Arab Emirates and constitute about 13 percent quota share of the total assets of the banking sector and contribute to the rate of 8.7 percent of GDP.

4. the Government is dominated by banks, (Mesopotamia, Rashid, the Iraqi bank of Commerce) more than 90 percent of the assets of the Iraqi banking system versus 10 percent for private banks.

5. total deposits of banking sector 34, 1 trillion dinars, the equivalent of 29 billion dollars at the end of the year 2010, dominated by State-owned banks to the largest share of up to about 89 percent of the total deposits in the country.

6. Notes reduced banking density of one bank for every 50,000 while global banking density is 10,000/bank branch, which emphasizes the need to increase the number of banks and increasing the number of banking deployment across Iraq and the provision of specialized human resources.