1 Prisoner Registry (Arabic)

1 Prisoner Registry (Arabic) REQUEST FOR APPLICATIONS FROM FOREIGN OWNED BANKS FOR ISSUANCE BY THE CENTRAL BANK OF IRAQ OF A FOREIGN BANKING LICENSE OR PERMIT IN IRAQ Through this Request for Application (RFA), the Central Bank of Iraq (CBI) will initiate the process of selecting foreign banks to be granted (1) a banking license to acquire more than 50% of an existing Iraqi bank, or establish a de novo subsidiary or (2) a banking permit to establish a branch of the foreign bank. Questions and requests for clarification can be submitted until May 10, 2004 by e-mail to: RFAmailbox@central-bank-iraq.org . An electronic copy of your proposal must be received at this same e-mail address no later than 5:00 PM Baghdad time on May 24, 2004. Also, no later than 5:00 PM Baghdad time on May 24, 2004, eight (8) hard copies of your proposal in Arabic and three (3) copies in English must be date and time stamped by DHL as having been received by DHL for delivery to the Baghdad address specified herein. The CBI would like to thank you in advance for your interest in this RFA. Dr. Sinan Shabibi Governor of the Central Bank of Iraq This is a Central Bank of Iraq Request for Applications. Overview: This Request for Applications (RFA) is part of a wide-ranging program by the Central Bank of Iraq (CBI), supported by the Coalition Provisional Authority (CPA), to strengthen Iraq’s economy by: (i) accelerating the modernization of the banking sector; (ii) building a new foundation for the banking system that is based on sound market principles; (iii) fully implementing measures among Iraq’s banks that are consistent with international best practices in all aspects of commercial bank operations; (iv) expanding banking products and services to the Iraqi population; and, (v) accelerating Iraq’s integration into the international financial community. The current commercial banking system suffered under the Saddam regime from years of restrictive regulation and the absence of opportunity to modernize the banking sector in many ways, including updating technology. The CBI is inviting interested foreign banks to participate in the economic reconstruction of Iraq by establishing a presence in Iraq. The establishment and operation of banks in Iraq is governed by the Iraq Banking Law of 2003 (Law) [1] and any subsequent revisions to that Law. Under the Law a Foreign Bank that desires to operate in Iraq (“Foreign Bank”) may do so by: (1) Acquiring more than 50% of an existing Iraqi bank; (2) Establishing a ‘Green Field’ or de novo subsidiary; or, (3) Establishing a branch of the Foreign Bank within Iraq. Acquiring more than 50% of an existing Iraqi bank requires an application and approval by the CBI. Establishing a majority or wholly-owned subsidiary of a foreign bank or bank holding company, requires issuance of a banking license by the CBI. Establishing a branch or a representative office of a foreign bank in Iraq requires issuance of a banking permit by the CBI. The CBI has decided to use this RFA for the applications for both licenses and permits by Foreign Banks wishing to begin operations in Iraq. Subsidiaries of foreign owned banks shall be required to have 50 billion dinars of capital. There is no restriction on where that capital is invested. Although capital is not required for a foreign branch, the CBI reserves the right to require branches to maintain in Iraq an excess of assets over its liabilities that are owed to residents of Iraq in such amount, if any, as the CBI may stipulate. The CBI Governor anticipates that both licenses and permits will be granted to successful applicants as soon as practicable after the CBI conducts its required due diligence. A determination on the application shall in no case take longer than 6 months from the date of notification by the CBI that the application is deemed complete. Foreign Banks that have responded to a previous solicitation but were not selected remain eligible to reapply. Foreign Banks should not respond to the solicitation if they are only contemplating an investment of 50% or less in an existing Iraqi Bank. If selected, a Foreign Bank is expected to comply with the commitments made in its response to this RFA in order to be granted the license or a permit. Material deviation could result in revocation of the license or permit. Proposal Information and Evaluation The CBI seeks written responses to this Request for Applications (RFA) from Foreign Banks. Responses must be in English and Arabic. [2] The written response is limited to 25 pages, excluding Appendices. Appendices will be limited to fifty (50) pages. We encourage applicants to send Appendices that are as short as reasonably possible. Information submitted in the Appendices that is already prepared in English need not be translated (e.g., annual report). The deadline for response to this RFA is 5:00 PM Baghdad time on May 24, 2004 (28 days from issuance of the RFA). By this time and date, an electronic copy of your response must be received at: RFAmailbox@central-bank-iraq.org . Also no later than 5:00 PM Baghdad time on May 24, 2004 , eight (8) hard copies in Arabic and three (3) copies in English of all responses must be date and time stamped by DHL as having been received by DHL for delivery to the following Baghdad address: Central Bank of Iraq c/o Coalition Provisional Authority Central Bank Team Main Palace, Room S205 At the request of the CBI, the complete RFA will be posted on the CPA website ( http://www.cpa-iraq.org/ ). In addition, notice of the RFA will be provided in the international business press. Applications should be in the format set forth in the “Format of Written Application” section of this RFA. Inquiries about this RFA, or requests for clarification of the language contained in the RFA, must be made by e-mail to RFAmailbox@central-bank-iraq.org . The CBI requires that once the RFA is made public, all questions regarding the RFA be made in written form to the e-mail address noted in the prior sentence. Contact with CBI or CPA officials concerning this RFA other than through the e-mail site above during the submission period may disqualify the applicant from being granted a license or permit under this RFA. The question period will end 14 days after the public issuance of the RFA. All questions and answers regarding the RFA deemed of general interest will be posted 21 days after the issuance of the RFA on the CPA website. While questions will be posted to the website, the identity of the entity or individual asking the question will not be revealed. Each submission will be evaluated by the Licensing Department of the Central Bank of Iraq who will make appropriate recommendations to the Governor of the Central Bank of Iraq for presentation to the Board of Directors for approval. It is incumbent upon the applicant to clearly identify information in its submission that should not be made public. The planned calendar for the selection process is as follows: Date_____ Selection Process April 26 Request for Applications issued by posting complete copies of it on the CPA website ( http://www.cpa-iraq.org/ ). May 10 Question period closes 5:00 PM – Baghdad May 17 Q & A’s will be posted on the CPA website for all participants to view, without the names of those submitting questions. May 24 Responses to the RFA are due at 5:00 PM Baghdad time in electronic form at RFAmailbox@central-bank-iraq.org and in hard copy to DHL for delivery to the address specified herein. Changes to this calendar or other notifications regarding this RFA will be posted to the CPA website. Reservations of Rights The CBI reserves the right to: (i) modify this RFA in whole or in part; (ii) not award any additional banking licenses or permits pursuant to this RFA; (iii) request additional information or clarifications from individual applicants; and (iv) reject any proposals it considers not to be in accordance with the criteria set forth in this RFA or to be submitted by a party which, in the opinion of the CBI, is not acceptable; and (v) limit the award of licenses or permits to only those applicants that the CBI considers to be the most qualified among those applicants whose proposals satisfy the criteria set forth in this RFA. Selection Criteria The CBI Board of Directors will approve licenses or permits for those Foreign Banks that meet the requirements in the Banking Law for a license or permit, as applicable, and that in their judgment are the most committed and best able to contribute to the development and modernization of the Iraqi banking system and the sound growth of the Iraqi economy. In recommending which Foreign Banks should be selected to receive a license or a permit, the licensing department will evaluate each submission based on the criteria noted below. The selection criteria below should be addressed in the written application, within the “Format for Written Application” section. Commitment to a Range of Products and Services within a Reasonable Time Frame - In evaluating the submission, the breadth and depth of products and services to be offered as well as the time frame for introducing those products and services will be viewed critically. A Foreign Bank is expected to begin operations as soon as practicable, but no later than six (6) months after being granted a license or permit. Commitment to Geographic Presence in Iraq - The Foreign Bank will receive more favorable consideration if its business plan provides for multiple branches with geographic diversity. Commitment to Additional Capital – For Foreign Banks that establish a subsidiary or purchase a majority interest in an existing Iraqi bank, the Foreign Bank’s commitment to capital beyond the minimum required (Iraqi Dinar 50 billion) will be viewed favorably. Commitment to Lending – Iraq has a significant and urgent need for both retail and commercial credit. The CBI will view favorably a strategy that includes a commitment to lend to multiple sectors in Iraq while maintaining credit integrity. Commitment to cash management and payments products – The CBI will view favorably the quick introduction of both domestic and international cash management and payments products. Initial Bank deposit taking may be in both Iraqi Dinar and US Dollars. Deposit taking in other currencies is permitted subject to CBI approval. Commitment to Training - The Foreign Bank is expected to bring modern banking techniques and technology to the banking system and to train its Iraqi employees in these tools and techniques. Its Human Resources plan should clearly outline a training program that will train staff in systems and prepare staff for management positions. Rating - The ratings of the Foreign Bank or its first tier parent by external credit rating agencies will be a factor in awarding a license or a permit. Please provide ratings for your bank in your submission. Format of Written Application The written response to this RFA should be structured as follows: General Description International Presence Business Plan Credit Strategy Bank Organization Technology Transfer Training Additional Information The following paragraphs provide guidance on the information that should be included in each of the eight areas. Please ensure that such information is presented in a clear, concise, and comprehensive manner. Excessive or elaborate explanations, or departures from the stipulated format, could cause the proposal to be disqualified or otherwise penalized in the evaluation process. If there are explicit expectations or implicit assumptions in the RFA that you consider to be unrealistic or that you cannot provide, please provide information to clarify the issue for the Central Bank. [3] 1. General Description of Foreign Bank Provide a general description of the Foreign Bank’s structure, including its ownership structure, asset size, number of employees, location of headquarters, foreign supervisory authority, capitalization, and credit ratings. Provide an organization chart with the names of the Board of Directors of the Foreign Bank applicant. Include the legal name of the Foreign Bank, mailing address, telephone, and fax numbers of the office providing the proposal. Also provide the name, mailing address, e-mail address, telephone, and fax numbers of the individual who will ultimately be responsible for the services and performance of the Foreign Bank’s proposal under this RFA. If different, please provide the name and contact information of the individual whom the CBI should contact regarding matters relating to this RFA. Applicants must be on-going banking operations with at least three years experience, and must be subject to comprehensive consolidated supervision by the bank supervisory authorities of their home countries. 2. International Presence of Foreign Bank Describe in general terms the Foreign Bank’s international presence. Provide data on the number of branches and offices on a worldwide basis. Provide more detailed information on your firm’s activities and strategy in the Middle Eastern region and on how your proposed presence in Iraq will fit into your bank’s strategy. Also, provide information on the Foreign Bank’s experience operating in developing and transitional economies. 3. Business Plan The Foreign Bank should submit a business plan that clearly specifies your business objectives for your first three years in Iraq, including the principle market segments you will target and the products and services your bank intends to offer as well as a time frame for introducing those products and services. The business plan should include projected time frames for the accomplishment of key milestones you will use to measure progress during your first three years. The plan should include initial measures to establish bank operations, staffing, etc. and for transitioning the bank to full-scale operations in Iraq. In addition the plan should include a description of your organizational structure. Also include a projected balance sheet, profit and loss statement and cash flow statement for the next three years. 4 . Credit and Risk Management Strategies Include a summary of credit policies and procedures and an outline of your lending strategy for Iraq. Also, include information regarding the risk management practices the Foreign Bank will use in Iraq 5. Bank Organization Provide an organization chart detailing roles and responsibilities of key personnel. For each key person, provide a Curriculum Vitae to include such information as nationality, permanent place of residence, current position, education, qualifications and professional experience. Include a current financial statement for key personnel. Describe personal or professional business ventures including but not limited to: offshore or domestic ownership of financial institutions and other business ventures regardless of location. Provide three references that will describe integrity and professional ability for key personnel. Provide an affidavit disclosing criminal convictions and other information as noted in Article 5, Paragraph 2(f) of the Iraq Banking Law. Provide any other information to enable the CBI to determine that key personnel are “fit and proper” as defined under Article 1 of the Iraq Banking Law. (Key personnel is defined as any person who is a member of the Iraq bank’s board of directors, authorized manager or member of the audit committee of a bank, and in the case of a branch, the designated branch manager. Also, any person that has the authority to control or influence major policymaking functions within the bank.) If you have not identified specific candidates for each position, describe the criteria you will use in selecting candidates for key positions. 6. Information Technology Summarize how you plan to use information technology in Iraq to support your business strategy. 7 . Training Describe your training strategy. Summarize your plans for training your Iraqi employees including details of the training resources available to your institution. 8. Additional Information To enable the CBI to perform a due diligence review of your application, please include the following: 1) A list of controlling owners of the Foreign Bank, and if applicable, its ultimate parent. (Control is defined in Article 1 of the Iraq Banking Law.) 2) A list of subsidiaries that form any part of the linkage between the proposed bank and its ultimate parent and their place of incorporation. 3) Identify the source and amount of funds that will be used in capitalizing the Iraqi bank, if applicable. 4) Any critical findings or letters issued by the applicant’s foreign supervisory authority with respect to the applicant within the last three years. 5) A list of any financial or other penalties imposed by the applicant’s foreign supervisory authority on the applicant within the past ten years and the reasons for those penalties, along with any pending legal actions (either civil or criminal). . 6) Describe the home country requirements designed to deter money laundering, terrorist financing or other illicit activities. 7) Describe the Foreign Bank’s policies and procedures to prevent its operations from being used for purposes of money laundering, terrorist financing or other illicit activities. 8) Provide a statement on the parent bank’s implementation of the institution-specific recommendations of the FATF Forty Recommendations regarding the prevention and detection of money laundering, along with the Eight Special Recommendations to combat terrorist financing. [4] 9) Foreign Supervisory Authority a) Provide the name of a person from the foreign supervisory authority (“Foreign Supervisor”) who can respond to questions about the Foreign Bank. b) Provide a letter from the Foreign Supervisor commenting on the status of the applicant (e.g., Foreign Supervisor’s view of whether the Foreign Bank has the financial, managerial and operational strength to support its proposed presence in Iraq). The letter from the Foreign Supervisor should include enough information such that the CBI understands the Foreign Bank’s overall standing in its home country and should state that the Foreign Supervisor has no objection to the proposed operation in Iraq. c) Provide a letter from the Foreign Supervisor as to whether the Foreign Bank is subject to global consolidated supervision, as described in the Basel Committee’s Core Principles for Effective Banking Supervision. d) Provide a description of the Foreign Supervisor’s evaluation and inspection system to determine the Foreign Bank’s compliance with laws and other requirements, along with to determine the level of risk in the Foreign Bank. 10) Financial a) Copies of the latest three audited annual financial statements, including balance sheets and profit and loss accounts of the Foreign Bank and for its top tier parent, if applicable. Note the accounting standards used, for example IAS. If not IAS, please describe the differences from IAS. Please state if the Foreign Bank has received a “qualified” opinion in the last three years b) Include a statement by an auditor indicating the auditor’s undertaking to take on the external auditing function pursuant to Article 46 of the Iraq Banking Law. c) If the Foreign Bank’s financial condition has changed materially since the most recent financial statements submitted, include the most recent quarterly statement. d) Provide current information that will enable the CBI to make a judgment as to the quality of the Foreign Bank’s assets. e) Provide the risk-based capital ratio as defined by the 1988 Basel Capital Accord, if the home country subscribes to such. Include the components of tier 1 and tier 2 capital, plus the tier 1 and total capital to risk-based assets ratios. i) Describe the components of capital proposed for the Iraq bank, if applicable. ii) If the home country capital standard differs from that established by the Basel Accord, please explain the requirement and the Foreign Bank’s capital position relative to its home country requirements. 11) Provide a statement that the Foreign Bank acknowledges it must abide by its Foreign Supervisor’s governing regulations and the regulations of the CBI. 12) Provide a statement that gives assurance to the CBI that the Foreign Bank will disclose information needed for the CBI to determine and enforce compliance with Iraq law. Provide information regarding any laws of its home country that limit the ability of the Foreign Bank to comply with such a request for information from the CBI. 13) If the Foreign Bank proposes to operate as a branch, the following undertaking from its head office, as required by Article 6, Paragraph 1(f) of the Iraq Banking Law should be included with the application. “An undertaking by the applicant issued by the head office through its principal officer, supported by an appropriate resolution of its board of directors, that it will, on demand of the CBI, make available, in the currency and as such place as may be specified by the CBI, funds necessary to cover all obligations and liabilities incurred in the conduct of banking business authorized under the permit.” [1] The Iraq Banking Law was promulgated by CPA Order Number 40 on September 19, 2003. [2] If there is an inconsistency between English and Arabic translations, the English translation will prevail. [3] Questions and comments may also be directed to the email address noted in the “Proposal Information and Evaluation” section of this RFA. [4] The Financial Action Task Force (FATF) sets out the framework for anti-money laundering efforts, which is designed for universal application.