Standard Chartered forced to pull banking staff out of Iraq

Standard Chartered, one of the two UK banks awarded licences to operate in Iraq last month, has already withdrawn its staff because of worries about security.

Standard Chartered, one of the two UK banks awarded licences to operate in Iraq last month, has already withdrawn its staff because of worries about security.

Standard Chartered and HSBC, along with National Bank of Kuwait, were awarded the licences on the condition that they had banking operations up and running by the end of this year.

Standard Chartered sent a team of two to make preliminary assessments but withdrew them earlier this month because of the increasing violence.

It is also part of the consortium, led by US bankers JP Morgan, setting up the Trade Bank of Iraq. However, all of its work is being done outside the country. HSBC has yet to send anyone to Iraq to start work on taking up its banking licence. It is understood to be assessing the security situation.

The two banks secured their licences after lobbying by Tony Blair's envoy, Brian Wilson.

The danger of doing business in Iraq nearly cost Foster Wheeler, the UK-based construction group, its contract to rebuild oil fields in Iraq. But Foster Wheeler, the first UK firm to win a reconstruction contract in the country, thrashed out an agreement with the US Program Management Office (PMO) on Thursday.

Two months after winning the deal, the company had sent out just two employees to the country because of deteriorating security. It came close to being stripped of its contract.

But at last week's meeting the PMO agreed to extend the company's 20 May deadline to start work on the contract. It also offered extra protection to Foster Wheeler staff travelling to the site in Baghdad.

A PMO spokeswoman in Baghdad said: "We have resolved the situation with Foster Wheeler as the company has agreed to increase mobility to Iraq."

At the start of the week, the PMO had written to Foster Wheeler warning that it risked breaching its contract.