Posted on 22 August 2011.
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)