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Private banks operate with little capital

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Private banks operate with little capital

Writer:Yasser Metwally
03/8/2016 12:00 am
Baghdad-Emad Emirate


Between economic academic d. Awad Fadel Ismail, inadequate commercial banks attract private sector financial surpluses explains the preference for savers of Government depository institutions private counterparts and this can respond to two reasons lack of protection for depositors in banks on security deposits for private banks.

He stressed in the interview for the morning that "legislation to create an institution or Fund means the guarantee of deposits in private banks eligibility for parity with State banks and equal ability to compete in terms of novelty and lack of private commercial banks adopt the public to handle.

He explained that the predominance of savings deposits in State banks don't reflect excellence in innovative financial transaction quality services they offer to their clients as much as they reflect a psychiatrist may not be fully justified,

it embodies the fear of losing money deposited with the deposit institutions do not provide a hedge against loss of savings in case of safety of its financial position to the logistical and operational risks.

He noted that the main causes of Government banks control more than 88 percent of the commercial banking system's deposits to the restrictions imposed by the Government ministries and public institutions on their operations with private banks.


Ismail added that overall economic activity depends essentially on Government business fed by oil supplier, to finance these actions lead, through the State budget, stacked channel Government funds to the banks,

this means that the change in government revenues is reflected mostly in the liabilities of the Central Bank's first budget in Government banks budget liabilities when a Government funded administrative expenses waltenmo operatingYeh, than banks deposits that lifts its liquidity, as long as the Government's cash position is strong because of its reliance on huge oil revenues, the effects of financing domestic government spending must eventually empties in the cash deposits of the banking system.

He continued, characterizing the structure of savings deposits in the banking mediation devices first rule phenomena visible to state banks on the overall savings deposits in terms of total deposits,

savings and fixed deposits in State banks totalled 42 trillion dinars in 2010 or 88% of total volume of savings deposits and then rose to 53 percent trillion dinars in 2012 with an 86% contrast did not share private commercial banks only 11% of the total savings deposits in the commercial banking system 2010 and 2012 respectively.

Ismail drew to the strange thing is that despite this domination on surpluses the Government banks working capital minimal compared with those means that private-owned banks taking advantage of other people's money deposited with it, especially its run government financial surplus.

He noted that the second phenomenon is the failure of private banks in the flow of cash surpluses towards liabilities issued by and reflected in the indicators of low current public deposits and savings and fixed has compared with deposited in State banks.

He said: the fixed savings deposits is still low compared with the total amount of private sector deposits at depository institutions,

it has occupied the current deposit rate of 64 by the hundred year 2010 then rose to 65 percent in 2012, the counterpart of that savings and fixed deposits declined from 35% to 34% of the total private savings deposits during the same period.

He continued, the third indicator is that State commercial banks acquires the bulk of fixed savings deposits to private commercial banking deposit and by 71%, 70%, 67% for 28 percent, 29 percent, 32 percent during the years 2010, 2012, 2011 respectively,

the fourth indicator total private savings deposits relative to GDP in private commercial banks compared to those in the State commercial banks amounted to 3, 2, 3% have Private banks
.

His weakness is reinforced, the fifth indicator sensitive liabilities of commercial banks to macroeconomic activity through low savings deposits to GDP.

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