British lender Standard Chartered launched banking operations in Iraq on Wednesday, saying it hoped to benefit from large infrastructure projects in a country trying to rebuild after years of conflict.
Standard Chartered is one of a small number of foreign banks with operations in Iraq, which is seeing rapid economic growth fuelled by oil production but also its worst upsurge in sectarian violence in at least five years.
The security concerns and a complex regulatory and political environment have put some international firms off doing business there. HSBC is trying to exit Iraq by selling its stake in Dar Es Salaam Investment Bank.
But Standard Chartered said it was upbeat about the economy, which it expects to grow by 9 percent next year, up from 6.7 percent in 2013.
It opened its country head office and first branch on Wednesday in Baghdad’s banking district on a street lined with blast walls and patrolled by guards with Kalashnikov rifles.
“The Iraqi government is planning large scale infrastructure projects and these will require international financing solutions,” said Gavin Wishart, chief executive of the bank’s Iraq operations.
The bank, which said it was the first international lender to have full-fledged banking operations in the country, plans to open another branch in Arbil, Iraqi Kurdistan, in December and a third in the oil hub of Basra in the first half of 2014.
Its aim is to “meet the increasing banking needs of its global network clients in Iraq, notably in the power, oil, telecoms and infrastructure sectors,” it said in a statement.
Standard Chartered has been in Iraq since 2006 with a representative office in Arbil in the more stable northern region.
There is a relatively small pool of foreign lenders operating in the country, where the banking sector is dominated by two state-owned institutions, Rafidain and Rashid, making it tough for other lenders to compete.
Since last year, Gulf lenders such as Abu Dhabi Islamic Bank and Qatar National Bank have opened offices in Iraq. Lebanon’s Bank Audi plans to launch in the country and Citigroup Inc. said in June it would open a representative office in Baghdad.
Standard Chartered said large oil reserves in easy-to-access oilfields made for strong growth prospects, and the country could also become a major gas producer. It said the government may return to the bond market to finance new infrastructure.