Iraq explores overhaul of largest state-owned lender

The Iraqi government is planning to split Rafidain Bank, the largest state-owned lender, into two separate entities, a senior government official has said.

The move will create one entity to primarily manage government finances and another to draw investment to support economic growth, Mudhhir Mohammed Salih, financial advisor to caretaker Prime Minister Mohammed Shia Al-Sudani, told Shafaq News.

He said a global financial consultancy is advising the government, without naming it.

Under the proposal, one entity will become Iraq’s sovereign bank and handle treasury operations, including the unified treasury account and coordination with more than 1,000 government spending units.

The sovereign bank will be closely linked to Iraq’s fiscal authority, aiming to improve efficiency, governance, transparency and financial discipline in public finances.

The second institution, “Rafidain One”, will be set up as a public-private joint-stock company, Salih said, adding that it will focus on providing loans to individuals and businesses and on managing foreign trade finance through a potential partnership with a global banking group.

The restructuring plan comes amid pressure from the US. Joe Wilson, the US representative, called for sanctions on Rafidain in August last year for allegedly funding Houthis. Iraq has rejected the accusations.

Separately, the Central Bank of the UAE fined Rafidain’s Abu Dhabi branch late last year for repeated compliance failures, the report said.  

Rafidain operates 164 domestic branches and seven abroad.