Iraq banking rules could hand control to foreign investors

Shafaq News – Baghdad

Iraq’s new banking regulations could marginalize local investors and open the door to foreign dominance of the financial sector, an economic watchdog cautioned on Saturday.

Eco Iraq, a local monitoring group, said the Central Bank of Iraq (CBI)’s updated requirements — in effect since August — set conditions too steep for domestic capital. Founding investors may acquire up to 60% of shares only if their assets exceed 4T dinars ($3B), a threshold largely attainable by international banks or sovereign wealth funds.

Under the rules, smaller Iraqi investors are capped at 10% ownership, or 20% with CBI approval. Banks failing to comply risk forced mergers, loss of their license, or liquidation.

“These conditions sideline national capital and risk turning Iraq’s financial sector into a playground for foreign entities,” the monitoring group warned.

The CBI has maintained that the reforms are designed to strengthen oversight and transparency in a sector long criticized for weak controls on dollar flows. The package includes a 2025 evaluation guide, standards manual, reform plan, and a binding compliance pledge.