Citigroup Inc (NYSE:C) has received approval to open an office in Iraq. The company says it’s looking to benefit from the approximately $1 trillion the government plans to spend on repairing the nation’s infrastructure and building up its oil industry after the war. The bank is the first American one to open an office in Baghdad.
Details On Citigroup’s Opening In Iraq
Bloomberg’s Stefania Bianchi reports that Citigroup has been scaling back its efforts in some of the world’s emerging markets. The bank told Bloomberg that after opening its first Iraq office in Baghdad, it may consider opening additional offices in other parts of the country.
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Iraq will be the first new country Citigroup Inc (NYSE:C) will move into in six years, and it comes while CEO Michael Corbat has said the bank would either sell or cut back its operations in emerging markets like Uruguay, Pakistan and Turkey. Corbat’s actions have been reversing the expansion strategy that was put in place by former CEO Vikram Pandit.
Iraq’s Economy Is Waking Up
Citigroup Inc (NYSE:C)’s CEO for Jordan, Iraq, Syria and the Palestinian territories told Bloomberg that the country views Iraq as ripe for opportunity and that the bank wants to take advantage of the numerous opportunities that are becoming available there. Mayank Malik noted that the two most significant opportunities in Iraq are the generation of oil revenue and the creation of infrastructure. The bank is estimating its Iraq initiative to be worth $1 trillion over time.
Iraq has said it would boost its spending by 18 percent this year, increasing it to $118 billion. According to estimates from the International Monetary Fund, the Iraqi economy is expected to grow 9 percent, which is the second fastest rate out of all 18 of the Middle Eastern and North African countries.
Iraq’s Oil And Infrastructure Growth
Capital Investments collected the biggest statistics regarding Iraq’s economy, and it’s easy to see why Citigroup wants to get in on the action. For the fiscal year 2013, the nation’s real gross domestic product grew 14.7 percent. Its nominal gross domestic product jumped from $130.57 billion last year to $154.3 billion this year.
There are signs of significant growth in the nation’s massive oil industry as well. In May, Iraq’s oil exports averaged about 2.484 million barrels per day.
BP plc (NYSE:BP) (LON:BP) is planning to invest $2.85 billion in its Rumaila oilfields this year. The company increased its planned investment from its estimate last year. The oil giant will also build a new terminal at Khor Al-Zubair, which will be an important element of Iraq’s infrastructure, especially as it pushes out its oil exports. Royal Dutch Shell plc (NYSE:RDS.A) (LON:RDSA) will begin producing crude oil at the Majnoon oil field this summer, while Exxon Mobil Corporation (NYSE:XOM) will explore for oil in the northern part of the country.
Also the French company Alstom is working on a new power plant in Diyala, which will be one of the nation’s largest and will cost about $450 million.