Iraq announced on Saturday it has awarded Britain's HSBC and Standard Chartered, and the National Bank of Kuwait (NBK), the first licences given to foreign banks for 40 years.

The three banks should begin operations before the end of the year, said the Central Bank of Iraq (CBI) in a press release.

The three banks were selected from 15 applicants that responded to a CBI request for proposals which closed last December.

The CBI said it might select other banks at a later stage, but that it had chosen HSBC, NBK and Standard Chartered Bank "to proceed to the final stage of the foreign bank licensing process."

"CBI will meet soon with these three banks to explain the remaining technical elements of the licensing process. CBI anticipates all three will be granted a license by mid-March 2004.

"The banks will be required to begin actual banking operations on-ground in Iraq no later than December 31, 2004. These banks will bring modern banking practices, capital and know-how to the Iraqi economy."