HSBC, Standard Charteredand National Bank of Kuwaitwere selected from a group of 15 financial institutions that applied for the foreign banking licences. Under the terms of the licences each bank will be required to have a minimum capital of New Iraq Dinars (NID) 50,000 million ($37 million) and to start branch operations before the end of the year.

The CBI is expected to issue a further three licences in the first half of 2004. It is understood to be prepared to go further and allow all of the 12 banks not selected in the first round to enter the market. 'I think the central bank will ease its restriction on issuing just six licences. They feel comfortable with the present set of banks and who they want to let in and they also know what the banking system needs,' Woelflein said.