Standard Chartered in Talks to Buy Warka Bank

London-based Standard Chartered Bank has been in talks for the past 3-4 months to buy a stake in Warka Bank, one of Iraq’s biggest private banks, a central bank official said on Monday.

Hassan al-Haidari, a central bank advisor, told Reuters:

They (Standard Chartered) wanted more than 50 percent but they (Warka) wanted (to give) less than 49 percent.

A branch manager at Warka Bank in Baghdad’s Green Zone, Hussam Abdul Kareem Khalaf, confiemed to Bloomberg:

Yes, there are negotiations for Standard Charter to acquire shares of Warka Bank. We are still not sure about the percentage of shares as negotiations are still ongoing, but this is expected to take place.

The National reported at the weekend that Abdul-Aziz Hassoun, executive director of the Iraqi Private Banks League, said the talks had not yet reached an advanced stage as Standard Chartered was still doing due diligence on the bank.

“Warka Bank is trying to get rid of its liquidity crisis and its failure to increase its capital to higher levels through negotiations with Standard Chartered as a partner,” Hassoun said.

He said Warka needed less than 100 billion Iraqi dinars ($90 million) to enhance its liquidity.

Reuters reports that Iraq’s central bank has a three-stage plan for banks to increase their capital to $213 million by June 2013 to spur lending in the war-battered state as it emerges from the shadow of sanctions and the 2003 U.S.-led invasion of Iraq.

There are 43 banks in Iraq, with the sector dominated by seven state-owned institutions, while the private sector accounts for just 10 to 15 per cent of deposits. In a country of 39 million people, there are only 700 to 800 bank branches.

Its banking sector is dominated by two state-owned banks, Rafidain and Rashid, which are undergoing restructuring to eliminate debt racked up after years of war and sanctions.

Much of Iraq’s private banking activity is limited to deposit services and a small amount is personal lending.

Warka Bank for Investment and Finance, which was established in 1999, has 130 branches and 350 ATM machines around Iraq.

(Source: The National, Reuters, Bloomberg)

5 Responses to Standard Chartered in Talks to Buy Warka Bank

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  2. AK August 22, 2011 at 11:22 am #

    It is positive thing to have foriegn financial institutions to invest in Iraq sopecially when one of the worlds leaders in banking like SC however, is it a great investment?!
    I think a study should be done on the consumer behavior toward baking and borrowing, personal or corporate, is addition to measuring the potentials at the same time!

  3. s c August 22, 2011 at 10:59 pm #

    Existing as well as future growth potential for any investors ( for 5- 7 years view) offer excellent returns. Foreign Banks’s participation in terms of fresh capital & latest technology will provide much needed banking services in the country which is still a cash dominated economy ,requiring lots of banking acitivies.

    Any investment ( for 5- years time horizan)in any sector of iraqi economy is likely to generate yield which is much more than what will be in most emerging markets.

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    […] Standard Chartered is in talks to take over Warka Bank (BWAI). (There’s more on the story here.) While there have been rumors to this effect for over […]

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