The recently established Iraq Trade Bank (ITB) has so far written over 100 letters of credit (L/Cs) for imports to Iraq and is considering many more applications from suppliers that want to finance trade with the war-torn country.

There is plenty of scope for new business according to the bank's president. He says that in addition to the billions of US dollars worth of facilities it has already secured to make its operations possible, the ITB is now negotiating for additional funds from Arab states.

L/Cs issued

"The total facilities that we have signed so far are US$2.4 billion and we hope to use most of it very soon," ITB President Hussein al-Uzri recently told a news conference in Kuwait City.

The bank, which will use Iraqi oil revenues as its source of capital, has issued close to 130 L/Cs for some US$300 million since it began operations late last year, Uzri said.

More funding

"There is a big number of applications," said al-Uzri who told reporters that the bank is looking for backing from more export credit agencies (ECAs) across the world.

"We are also in the final stages of signing a credit facilities agreement with the Inter Arab Export Guarantees Organisation (IAIGC)," said al-Uzri who added that it would be expecting hundreds of millions of dollars in export guarantees from that corporation.

The IAIGC is a pan-Arab ECA that aims to promote development in Arab countries by stimulating financial transfers amongst member states by providing investment risk coverage and supporting development studies. The Kuwait-based corporation was established in 1965 and nearly all Arab countries are members.

Non-Arab backers

The ITB, arranged with an international consortium led by J P Morgan, was set up in July 2003 with a capital of US$100 million to provide trade finance and L/Cs in post war Iraq for the private and public sectors.

Speaking at the same news conference as al-Uzri, J P Morgan Chase's managing director, Daniel Zelikow, said the bank's main backers have been the US and Japan. Their ECAs have provided US$500 million each while Italy's has stumped up around US$300 million.

No projections

Other credit export agencies that signed up to support the ITB came from Austria, Australia, Belgium, the Czech Republic, Denmark, Germany, Luxembourg, the Netherlands, Poland, Spain, Sweden, Switzerland and the United Kingdom.

"These are the export credit agencies that have signed up so far. We would expect in coming months others will sign up, making available additional credit," Zelikow said without going into any more detail.

J P Morgan platform

Uzri and Zelikow were speaking to reporters after a presentation hosted by National Bank of Kuwait, a member of the J P Morgan-led consortium running the trade bank.

Front office operations at the bank were being run by Iraqis, while middle and back office operations were handled by an existing U K-based J P Morgan platform, Zelikow added.

Al-Uzri said there were about 17 other small commercial banks operating in Iraq, with total reserves of about US$5 billion.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.