The Coalition Provisional Authority confirmed Friday that the consortium led by J.P. Morgan Chase & Co. has won the contract to run the Trade Bank of Iraq.
As reported in American Banker Thursday, the J.P. Morgan Chase group's bid led the group of six finalists, which included consortiums led by Citigroup Inc., Wachovia Corp., Bank of America Corp., Bank One Corp., and ABN Amro Holding NV of the Netherlands. ABN Amro was the only stand-alone bank in the running.
Twelve other banks will be involved in the contract. They include Standard Chartered PLC of the United Kingdom, Bank Millennium SA of Poland, Credit Lyonnais of France, Royal Bank of Canada, and National Bank of Kuwait.
Peter McPherson, financial coordinator for the Coalition Provisional Authority, said it received an "enormous response" to the bidding contest.
"It became of intense interest to a large number of banks, reflecting a view that in the future that Iraq is important" to them, Mr. McPherson said in a conference call Friday afternoon to announce the contract. "These banks were making a commercial judgement about the future of Iraq."
Trade Bank of Iraq's initial goal will be to facilitate trade and commerce in the country as it rebuilds its economy. The basic function of the bank, which the Provisional Authority expects to be up and running by the end of this month, will be to bolster confidence between trading partners.
For example, the bank will give assurances through letters of credit that when a company in Germany or the United States sells a piece of equipment to Iraq it will receive payment. It is expected to handle hundreds of millions of dollars in transactions and could be involved in $100 million a month in deals.
The Morgan Chase consortium's proposal convinced the coalition that "they could to a cost-effective, quality job," Mr. McPherson said.
The consortium of banks running the trade bank will have the opportunity to get involved in other transaction businesses in Iraq, which would provide additional fees over and above the trade bank's basic functions.
Mr. McPherson said it is his hope that every bank that bid on the contract will eventually do business in Iraq.
