- The Washington Times - Friday, February 23, 2007

BAGHDAD — There is nothing routine about a trip to the bank in Baghdad.

Confronted by criminal gangs on the streets and demands for bribes from tellers in the branches — not to mention long lines, shortages of bank notes, and other inconveniences — many Iraqis are opting simply to keep their savings at home.

Even without the security concerns, financiers and government officials say, there are not enough banks in Iraq to serve the population and finance sorely needed reconstruction, leaving companies and individuals struggling to secure their assets.

“You must keep it somewhere,” said Abd Ali Radi, the 56-year-old owner of a modest bus company. “This is a problem for all Iraqis today.”

Interviewed in a restaurant last month, Mr. Radi recalled a recent trip to his bank in which, while nervously edging ahead in line, he heard the familiar sound of an ammunition round being injected into the chamber of an automatic pistol. He quickly fled.

Ali Al-Ajeely, a 48-year-old travel agency owner, said he is so fearful of carrying large amounts of cash that he avoids the city’s depositories altogether. “It’s safer to stay away from the banks,” he said.

And businessman Hamza Own, a 47-year-old waterworks contractor, called the banks insecure and inefficient. “I have better ways of storing my money,” he said, adding he last held a bank account in 1990.

Several banks in Baghdad this year have suffered daylight heists in which millions of dollars were stolen from their main offices, branches and armored vehicles.

“Most banks handling cash have experienced large robberies — a million here, another million there,” said Foud M. Mustafa, the managing director of the Credit Bank of Iraq.

The robberies have forced some institutions to reduce the amount of cash they keep on hand. “Smaller is better now,” said Zuhair Al-Hafidh, whose Ashur International Bank focuses on the investment sector.

Iraqi banks guarantee their deposits, but customers have few assurances while traveling to and from the institutions. And in a city where dozens of people are killed every day, many residents feel it is more practical to keep their savings at home.

“If anything happens to you, your family has the money,” said Mr. Al-Ajeely, the travel agent.

Yet even in a society where an estimated 70 percent of business is conducted in cash, many Iraqis can’t avoid banks.

Raad Mohammed Salman, whose company transports oil, said the volume of his business forces him to make deposits because “it’s too much to keep at home.” But he doesn’t relish the experience.

Corrupt bank clerks commonly press for bribes of 50,000 dinars — about $38.50 — to complete a transaction valued at a little over $23,000. “They know I have good contracts with the oil ministry,” Mr. Salman explained.

Wa’al Abdul Mutalab, a 39-year-old money changer, said he handles tens of thousands of dollars daily and delivers cash deposits to his bank on a motorcycle to avoid thieves.

Once in the banks, Mr. Mutalab said, he must deal with long lines of government pensioners. “I have to arrange an appointment so I can finish quickly,” he said.

Misgivings about banks date from the rule of Saddam Hussein, who would impose restrictions on banks without warning during times of unrest — notably a $750 monthly limit on withdrawals after the 1990 invasion of Kuwait.

Saddam did open the banking sector to private institutions, and 21 such banking companies operate in Iraq today. But financial analysts say it is still not enough, especially as security problems have forced them to close branches and shelve expansion plans.

The Credit Bank of Iraq had planned to create 55 branches after Saddam’s fall, but it recently closed two in Baghdad and now has only 12 open, according to Mr. Mustafa, its director.

During the nearly four years since Saddam was overthrown, five Iraqi banking companies have partnered with foreign banks. But companies outside Iraq still are hesitant to risk investments.

“We have no dealings with foreign banks now,” said Farzdak Abdal Razak, a manager at the Middle East Investment Bank in Baghdad. He said merger talks with Citibank officials in Jordan collapsed last year.

Bank directors still dream of adding branches, welcoming foreign investors and having automated teller machines operating 24 hours a day. But most Iraqis would settle for a safe place to keep their money.

For those with just a little cash like Mr. Al-Ajeely, the matter is simple. “I keep it in my pockets,” he said.

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