Peter McPherson, director of economic development for the provisional authority, announced the selection of JP Morgan's group over five other competitors to operate business estimated at $100 million a month initially.

The Trade Bank was created in July to make it possible for Iraqi agencies to make big-ticket purchases using letters of credit.

But McPherson added that the Trade Bank will not be handling oil revenues.

On Thursday the US Export-Import Bank approved a $500 million loan insurance programme to support sales of US agricultural goods, equipment and other products to Iraq.

It came one day after President Bush lifted restrictions on Export-Import Bank operations in the country.