The banking sector represents one of the fundamental pillars supporting economic activity and sustainable development in any country. It performs the role of a financial intermediary that mobilizes savings and directs them toward productive investments. In Iraq, the state-owned banking sector constitutes a significant part of the financial system, as government banks dominate a large share of banking assets and credit in the financial market. However, over the past decades, Iraqi state-owned banks have faced numerous structural, administrative, and technological challenges that have negatively affected their efficiency and competitiveness with private and regional banks. Consequently, restructuring Iraqi government banks has become a crucial reform step aimed at enhancing the efficiency of the banking system, improving the quality of financial services, and supporting financial and economic stability in the country. Concept of Bank Restructuring Bank restructuring refers to a set of reform measures designed to improve the performance of banking institutions and strengthen their financial, administrative, and operational capabilities. These measures usually include reorganizing the administrative and financial structure of banks, addressing non-performing loans, modernizing technological systems, improving credit policies, and enhancing governance and internal control mechanisms. Restructuring becomes necessary when banks suffer from operational inefficiencies, accumulated bad debts, or weak capital positions. In such cases, restructuring helps rebuild confidence in the banking system and strengthens its ability to support the national economy. The Situation of Government Banks in Iraq The Iraqi banking sector is characterized by the presence of several state-owned banks that dominate most banking activities, most notably Rafidain Bank and Rasheed Bank. These banks were established decades ago and have historically played a major role in financing various economic activities, particularly within the public sector. Nevertheless, these banks have encountered several challenges, including weak technological infrastructure, reliance on traditional banking methods, high levels of non-performing loans, and limited diversity in the financial services provided to customers. Moreover, the unstable economic environment and the political and security challenges experienced in Iraq over recent years have also negatively affected the performance of these banks. Objectives of Restructuring Government Banks The restructuring of Iraqi government banks aims to achieve several important economic and financial objectives, including: 1.Improving the operational efficiency of government banks. 2.Enhancing their competitiveness with private banks. 3.Developing and modernizing banking services provided to customers. 4.Promoting financial inclusion and increasing public trust in the banking sector. 5. Supporting economic development by expanding financing to the private sector. Additionally, restructuring seeks to improve transparency and strengthen sound governance in bank management in accordance with international banking standards. Requirements for Successful Restructuring The success of restructuring government banks requires several key conditions, including: First, reforming the administrative and organizational structures of banks by adopting modern management practices and developing human resources. Second, modernizing banking technological systems, including the adoption of electronic banking systems and digital payment services. Third, addressing the problem of non-performing loans through effective credit risk management policies. Fourth, enhancing the independence of banks in making financial and administrative decisions without non-economic interference. Fifth, strengthening the regulatory and supervisory framework by the central bank to ensure compliance with international banking standards. Challenges Facing the Restructuring Process Despite the importance of restructuring government banks in Iraq, the process faces several challenges. These include resistance to change within institutions, weak technological infrastructure, and the need for significant financial investments to modernize banking systems. In addition, limited banking awareness among some segments of society and low public trust in the banking sector present additional challenges to the development of banking activities. Therefore, the success of banking reform requires coordinated efforts by the government, the central bank, and other financial institutions. Conclusion The restructuring of Iraqi state-owned banks represents a fundamental step in Iraq’s broader economic and financial reform process. It contributes to building a more efficient banking sector capable of supporting economic development. Furthermore, modernizing the administrative and technological systems of these banks can strengthen confidence in the banking system and enhance its role in mobilizing financial resources and directing them toward productive investments. Therefore, the success of the restructuring process requires a comprehensive strategic vision and a genuine commitment to reform, along with the adoption of international best practices in banking management in order to build a strong financial system that supports economic stability and sustainable development in Iraq.