Citigroup is set to become the first American bank to open an office of its own in Baghdad, highlighting financial firms' growing interest in Iraq a decade after the US-led 2003 invasion.
Executives say the representative office Citi has received preliminary approval for will help support its corporate customers in Iraq and act as a liaison for companies looking to do business there.
British bank Standard Chartered is also making a push in Iraq with plans to open branches in three cities.
"Essentially what we are doing is following our clients," said Mayank Malik, Citi's chief executive for Jordan and Iraq, ahead of an official announcement Monday. "We see this as a giant waking up. ... The time to enter is now. It's not when everything has been done."
Iraq has struggled to attract interest from Western companies outside of the oil sector in the 10 years since US-led forces toppled Saddam Hussein. Security and political instability remain major concerns, and corruption within the top-heavy economy is deeply entrenched.
Even so, foreign banks see opportunities as Iraq's economy opens up on the back of an oil boom.
The World Bank expects Iraq's economy to grow by 9 per cent this year, compared with just over 2 per cent for the global economy as a whole. Last year Iraq became the second-largest oil producer in Opec, and now churns out more than 3 million barrels of crude a day.
Iraq's financial system is dominated by state-owned banks, though lenders from nearby countries including Iran and Lebanon have opened branches since the war. Abu Dhabi Islamic Bank, one of the largest banks in the UAE, opened its first outpost in Baghdad last year.
Iraq is slowly showing signs of economic development, with new hotels, restaurants and car dealerships popping up. But it remains a challenging place to do business.
More than 2,000 people have been killed in bombings and other violent attacks since the start of April in the worst outburst of violence in five years. And the country is politically volatile. Iraq's long-serving central bank governor was abruptly removed from his post in October following a probe into alleged financial wrongdoing.
Citi's Iraq country head, Dennis Flannery, who was previously the US Treasury Department's representative at the US Embassy in Baghdad, described Iraq's unpredictability and instability as "part of the landscape" of the country.
"The economic engine is still humming along. We haven't seen any reason to alter our strategy," he said.