Tag Archive | "HSBC"

Iraq Veterans Sue Banks over Terror Financing


By John Lee.

A lawsuit has been filed in the US against Barclays, Credit Suisse, HSBC, Royal Bank of Scotland (RBS), and Standard Chartered, seeking to hold them responsible for attacks on the US military because their alleged processing Iranian money that financed the attacks.

According to a report from Reuters, the lawsuit, filed by wounded US veterans and family members of US soldiers killed in Iraq, alleges that the banks conspired with Iranian banks to mask wire transactions in order to evade U.S. sanctions, and that Iranian banks then funneled more than $100 million to militant groups that operating in Iraq.

Since 2009, the five banks have agreed to pay about $3.2 billion to the U.S. government to resolve allegations that they handled money in violation of sanctions against statess such as Iran, Libya and Cuba.

(Source: Reuters)

(Terrorism image via Shutterstock)

Posted in Banking & Finance, SecurityComments (0)

Bank of Baghdad gets New MD


By John Lee.

The Bank of Baghdad (BOB) has reportedly announced the appointment of Mr. Faisal Al- Haimus as Managing Director.

According to Radio Dijla, Mr. Al -Haimus has over twenty years of banking experience with Standard Chartered, HSBC and Mashreq Bank.

(Source: Radio Dijla)

Posted in Banking & FinanceComments (0)

A Vote of Confidence for BDSI


By Mark DeWeaver.

So far this has been a bad year for shareholders of Dar Es Salaam Bank (BDSI). Adjusting for July’s 23.2% rights and 18.5% bonus issues, the shares are down 36% year-to-date (as of September 10). This compares to a ytd return of -5% for the ISX index and +6% for Rabee Securities RSISX index.

This dismal performance is mainly due to the decision of majority shareholder HSBC to exit its position. The British bank announced in June that it was looking for a buyer for its 70.1% (pre-rights issue) stake and that it would not be subscribing to BDSI’s rights issue. (See this story.) Indeed, getting rid of BDSI now seems to be quite high on the HSBC “to do” list. At one point it even offered to give away its stake for nothing! (This offer was blocked by the Iraqi regulators, however.)

Without HSBC as a shareholder, BDSI could conceivably lose a sizable share of its current business. But this does not necessarily mean that earnings growth will suffer. There is likely to be considerable room for the bank to expand into new areas.

Lending is the most obvious example. As of the end of June, BDSI’s loan/deposit ratio was a mere 2%, the second lowest among the listed banks. The average for the sector is 40%. HSBC’s approach to risk management in Iraq has clearly been unduly cautious. With a new majority shareholder, BDSI may be in a position to grow its loan book considerably, thereby replacing lost fee and commission revenue with interest income.

It is also encouraging that the bank recently increased its capital from IQD 105.8 to IQD 150 billion. Following HSBC’s decision not to take up its rights, its rights shares were offered to the public and were reportedly oversubscribed. The biggest subscriber is said to have been one of the local investors in last February’s Asiacell IPO.

This vote of confidence had an immediate effect on the share price. Since closing at a multi-year low of IQD 1.07 on August 28, the last day of the subscription period, as of September 10 BDSI is up 26%.

Life without HSBC might not be so bad after all.

Posted in Investment, Mark DeWeaver on Investments and FinanceComments (5)

Standard Chartered plans Iraq Expansion


By John Lee.

UK-based bank Standard Chartered is counting on the assistance of the British government to help it to open branches in Iraq by the end of the year, according to a report from The National.

The newspaper says the company plans to open three branches in the next eighteen months, to tap into the business generated from reconstruction.

US banks including Citibank and JPMorgan Chase have both recently announced investments in the country, although HSBC announced plans to sell its local subsidiary, Dar Es Salaam Investment Bank (DES).

We are planning to open three branches in Iraq, Baghdad, Erbil during the fourth quarter of 2013 and then Basra during 2014, subject to regulatory approvals,” a spokesman for Standard Chartered said.

The bank has already submitted its branch licence application to the regulators in Iraq. Our main aim is to meet the increasing banking needs of our global network clients in Iraq, notably in the power, oil, telecoms and infrastructure sectors.

It has run a representative office in Erbil since 2006 but is looking to expand its presence and hire “significant numbers” of local Iraqis.

The British embassy is said to be taking an active role in assisting the bank, by facilitating negotiations with the Baghdad and Erbil.

US’s Citibank established a representative office in Baghdad this year, while JPMorgan has deepened ties with the Trade Bank of Iraq (TBI).

(Source: The National)

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HSBC hits Regulatory Issues over Iraq Exit


By John Lee.

Banking giant HSBC is reportedly struggling to exit its Iraqi operations, having had two proposals to sell its stake in Dar Es Salaam Investment Bank (DES) rejected by the country’s regulator.

We reported in June that HSBC was exploring options to dispose of its 70.1 percent holding in the Iraqi bank following a strategic review.

According to Reuters, DES, which focuses on corporate and consumer banking and has eight branches in Iraq, has been linked to HSBC since October 2005. Its shares last traded at 1.36 dinars, down 63 percent from this year’s high, which was hit in January, and far below levels around 6.00 dinars in 2011. The current market price values HSBC’s stake at about 100 billion dinars ($86 million).

The company’s chairman, Asad al-Kudhairi, said the Iraq Securities Commission (ISC) objected to HSBC selling at a value significantly below the market price. The regulator said that HSBC’s previous proposals to sell were not approved by the ISC because they breached Iraqi financial regulations.

ISC chairman, Abdul Razzak al-Saadi, told Reuters:

HSBC first proposed abandoning its stake in DES to Iraqi investors. We asked them the reason for abandoning its stake and the mechanism for transferring the stake, but they never returned with answers.

One of HSBC’s proposals was for it to sell its DES shares at a nominal price of one Iraqi fils (a thousandth of a dinar) each, but HSBC officials did not explain why the bank wanted to do this, the regulator added. He did not elaborate on the ISC’s objections to HSBC’s proposals.

The central bank has agreed to extend the deadline for Dar Es Salaam to increase its capital until it sorts out this issue with HSBC.

Zawya reported that DES had a net profit of 12.06 billion dinars on revenue of 33.64 billion dinars in 2011, the latest period for which data is available.

(Source: Reuters)

Posted in Banking & FinanceComments (3)

HSBC Considers Quitting Iraq


By John Lee.

HSBC said today [Tuesday] that it is considering selling its 70.1 percent stake in Dar Es Salaam Investment Bank (BDSI), which has made it the main international lender in Iraq.

In April, Simon Cooper (pictured), HSBC’s chief executive for the Middle East and North Africa, told reporters that its presence in Iraq was under review.

The company told the stock exchange on Tuesday:

Following a strategic review, it was decided to explore options for the disposal of HSBC’s shareholding in DES [Dar Es Salaam] …

“HSBC … has further advised DES that it will not subscribe to any offer of shares by DES as part of its proposed capital increase.

In other news, Citi announced the opening of an office in Baghdad.

(Source: Reuters, HSBC)

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HSBC Reviewing Iraqi Operations


By John Lee.

UK-based banking giant HSBC has said it is reviewing its operations in Iraq.

Simon Cooper (pictured), chief executive for the Middle East and North Africa, told reporters in Dubai:

In terms of Iraq, it’s a market that we will continue to review.

According to a report from Reuters, he did not elaborate and declined to comment when asked for clarification.

The company operates in Iraq through the Dar Es Salaam Investment Bank, in which it has a 70 percent stake.

It had been announced as a bookrunner for the Asiacell IPO, but pulled out. A source close to the deal said HSBC exited because of “issues around local distribution”.

(Source: Reuters)

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“Rocky Road Ahead” for Asiacell IPO


By John Lee.

Doubts have been expressed regarding Asiacell‘s ability to raise the record $1.27 billion planned in its forthcoming IPO (initial public offering).

According to a report from International Financing Review, observers are said there is a strong possibility the deal may not go through.

The thing about these three Iraqi mobile companies is that they were required to IPO, but none of them want to IPO,” said one ECM banker covering the region.

All three firms, Zain Iraq, Asiacell and Korek, failed to meet the original deadline of an IPO by August 2011 and fines were automatically triggered.

The regulators are in a difficult situation. They can’t just cancel the licences and take all those phones offline,” the banker said.

There were suggestions that there is not a strong enough investor base in Iraq to absorb a US$1.27bn deal, and there are question marks over the infrastructure capabilities of the Baghdad bourse.

And if local reports are to be believed, the transaction was mistakenly launched on a public holiday – anyone wanting to put in orders would have found the Iraq Stock Exchange closed for the day.

HSBC and Morgan Stanley were announced as managing the offer along with the Iraqi firm Rabee Securities, but Morgan Stanley withdrew last year after it became clear the deal’s distribution focus was to be almost entirely domestic. It remains an adviser to Asiacell’s parent company, Qatar’s Qtel.

HSBC stayed, but when the intention to float was announced late last year it was no longer on the syndicate list and Rabee Securities was listed as sole bookrunner. A source close to the deal said HSBC also exited because of issues around local distribution.

Melak Iraq is advising the company.

(Source: International Financing Review)

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