The bank, Lebanon’s oldest with a history stretching back nearly 100 years, currently operates in 10 countries across three continents, including France, the UAE, Cyprus, Algeria, Libya, Syria, Sudan, and Belarus. Globally, Fransabank held $17 billion in assets, $14.1 billion in deposits, $5.3 billion in loans, and had $160 million in net profits in 2013.
In addition to its Erbil branch, Fransabank has operations in Baghdad and plans to expand further to Basra in the near future. Lebanese banks have a very strong presence in Iraqi Kurdistan, and Fransabank’s nascent business there is reflective of a more general trend of Lebanese banks making some of their first forays into the Iraqi market in the security and stability of the Kurdistan Region.
Fransabank’s operations in the Kurdistan Region focus primarily on the corporate banking sector. Nevertheless, officials from the bank hope their presence in the Region can contribute to a broader revitalization of the banking industry in Kurdistan by re-establishing trust among local customers. Khalil Zeidan, Country Manager for Fransabank in Iraq, referenced the group’s efforts to restore public confidence in Kurdistan’s banking sector, explaining, “We are really new here. We are going to reach the personal market. It is our mission to educate people and have them put their trust in banks.”
To build that trust, however, Fransabank will have to overcome a number of unique challenges in the local market. Outdated technology and a lack of integration across the banking sector often mean that something as common as a credit card will not work at all points of sale or even at all banks. Though this continues to be a major impediment for both consumers and banks, Fransabank has been engaged in consultations with Iraq’s federal government as Baghdad draws up tentative plans to create a national credit card network and a system to track credit history.
In the Kurdistan Region and Iraq in general, it can also be difficult for expats working for foreign firms to withdraw money from local ATMs. Fransabank’s global banking network and its long history of partnerships with foreign banks mean that its ATMs in the Kurdistan Region have largely been able to avoid these issues.
We are really new here. We are going to reach the personal market. It is our mission to educate people and have them put their trust in banks.
One challenge beyond the control of the group is geopolitics. Nevertheless, the uncertainty and costs associated with Iraq’s current political turmoil weigh heavily on the strategic outlook of Fransabank or any local banking institution. Local Fransabank management also pointed to liquidity crises caused by Baghdad’s suspension of the Kurdistan Region’s budget in the wake of political disputes as an impediment to the growth of the banking sector in Kurdistan.
Despite these hurdles, an interim agreement between the Iraqi government and the KRG in November that restored $500 million in budget payments to the Kurdistan Region while establishing a more cooperative system for oil exports has sparked hopes that 2015 will bring renewed economic growth and further development of Kurdistan’s banking sector.