Tag Archive | "Warka Bank"

Warka May Cost US Army Millions

Like a replay of the Great Depression, a bank in Iraq went under in 2010, nearly taking millions of American dollars with it.

According to a report from the Washington Times, Iraq’s Al-Warka Bank was already having stability problems when the U.S. began to close all its accounts as part of the withdrawal of troops from Iraq.

The Pentagon’s internal inspector general has said that since the bank was placed in receivership in November 2010, the US Army has been unable to readily withdraw cash.

The estimated loss of $5.4 million is only now coming to light because the disbursing officer in charge of the funds never reported the loss, the Inspetor General said, “because she believed she would recover these funds in the future.”

About $1.1 million has been repaid so far by the bank, inspectors said, but not getting the proper Defense Department debt payment experts involved immediately puts the rest of the cash — $5.4 million — at risk.

(Source: Washington Times)

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CBI “Lifts Custody” over Warka Bank

By John Lee.

The Central Bank of Iraq (CBI) has announced that its board has decided to “lift custody [guardianship]” over Warka Bank on August 25, 2013, following a final decision made by the Financial Services Court on 26th May, 2013.

Warka Bank announced on its website that:

This decision comes in accordance with the decision issued by the court appeal in favor of Warka Bank for Investment and Finance.

A copy of the announcement can be viewed here.

(Sources: Warka Bank, Rabee Securities)

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Warka Bank Claims Court Victory

By John Lee.

Warka Bank has issued the following statement with regard to its legal case against the Central Bank of Iraq:

“With regards to the legal court case Warka Bank for Investment and Finance has filed against the Central Bank of Iraq Warka Bank for Investment and Finance is delighted to inform its cliental, shareholders and management that the Iraqi Supreme High Court has awarded its decision in full favor of Warka Bank for Investment and Finance confirming its judicial decision that the liquidity crisis and events leading to Warka’s declining financial position is entirely due to the fault, malice, mismanagement and misdirection of both the Ministry of Finance and Central Bank of Iraq their ill actions taken against the bank placing the full blame and cause on both the Central Bank of Iraq and Ministry of Finance their lack to take the proper action measurements and steps to resolve the crisis properly in supporting the rehabilitation of the largest financial enterprise in the country.

“Where we are delighted to add that the court decision confirms that Warka Bank for Investment and Finance has implemented, practiced and maintained all legal banking guidelines, protocols and regulations set by the bylaws of the Central Bank of Iraq confirming its true innocence.

“We have posted a copy of the court’s decision to bring comfort joy and happiness to all those whom have supported our bank, board of directors and management.”

A copy of the court document can be downloaded here.

(Source: Warka)

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Warka Bank Saga Shows Iraq Political, Business Tensions

Iraqi banker Saad al-Bunia says Warka Bank for Investment and Finance, which was placed in insolvency proceedings by authorities this month, is a victim of its own success, with its growth threatening the near-monopoly of state banks.

“They don’t want a strong bank to operate and compete with state banks,” said British-educated Bunia, a member of one of Iraq’s old and wealthy merchant families, who accuses authorities of waging a campaign to undermine the bank, according to a report from Reuters.

The rise and fall of the country’s largest privately owned bank, and the struggle to ensure it rises again, underline the opportunities and obstacles in Iraq’s chaotic business environment.

The report says the saga also shows how political divisions plague business in Iraq. The controversy over Warka has polarised government officials and members of parliament, highlighting a rift between the Shi’ite-led government and a Sunni Muslim community which lost political dominance because of the U.S. invasion in 2003, but which still retains considerable economic power.

The central bank took custody of Warka, in which the Bunia family owns a 56 percent stake, early this month; an external auditor will study how to restructure it and whether it needs to sell assets to raise capital. Warka’s board of directors filed suit last week to try to reverse the central bank’s decision.

Central bank deputy governor Mudher Kasim said the custodianship decision was prompted by growing liquidity problems at Warka, its difficulties in meeting depositor withdrawals, and its failure to reach an agreement in talks with Standard Chartered on the foreign bank acquiring a majority stake.

“The bank expanded by giving loans – it appeared collateral for these loans was weak. What concerns us foremost is the stability of the financial sector and depositors’ rights, and thirdly shareholders’ rights,” Kasim told Reuters by telephone from Baghdad.

“This is not a bad bank and was one of the best private banks in terms of assets, technology and the number of its branches, which constituted more than a quarter of private bank branches” in the country, Kasim said.

He strongly denied any suggestion that authorities were victimising Warka. “The bank’s investment ability weakened and if capital drops even by 5 percent, the central bank can put any bank under custodianship. We gave the bank several chances to restructure but this did not work.”

(Source: Reuters)

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Warka Bank placed under ‘Guardianship’

Iraq’s central bank has reportedly placed private bank Warka Bank under guardianship to supervise it through insolvency.

Warka Bank had been in talks with Standard Chartered Plc to sell a stake last year, but they were not successful.

According to the report from Reuters, Mudher Kasim, deputy governor of the central Bank of Iraq, said:

We gave Warka a chance to have Standard Chartered to be a partner but that did not happen, so there was nothing we could do as a financial authority … but to intervene as a guardian.

When the bank loses its capital, fails in its financial operation and faces an unsolved problem, the central bank according to its law, intervenes as a guardian and appoints a new temporary administration to run this bank.

He said the central bank would appoint a new administration to run Warka Bank, which would be given a month to appoint an auditor to determine how to restructure it and whether it needs to sell assets to raise capital.

Abdul-Aziz Hassoun, executive director of the Iraqi Private Banks League, said in August Warka needed less than 100 billion Iraqi dinars ($90 million) to enhance its liquidity.

(Source: Reuters)

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Warka Bank enters Djibouti Market

President Ismail Omar Guelleh recently inaugurated the first subsidiary of Iraq-based Warka Bank for Investment and Finance (BWAI) in Djibouti to offer full range of banking services. The ceremony was attended by the Prime Minister Dileita Mohamed Dileita, Mr. Hichem Ben Turkia, who is Warka Bank representative, several members of government, as well as ambassadors and representatives of diplomatic corps accredited to Djibouti and representatives of international organizations.

Established in 1999 in the Iraqi capital, Warka Bank for Investment and Finance now has branches in Jordan and Lebanon and is one of Iraq’s biggest private banks. The entry of BWAI has risen the number of private banks operating in the country to a dozen. It plans to offer facilities such as transferring remittances, credit cards, personal loans, long-term finance, trade finance, structured finance and investment.

The Chief of Djibouti’s central bank, Mr. Jama Mohamoud Haid, who was also present for the occasion said this event highlighted Djibouti’s rapidly growing economy. “This second ribbon cutting ceremony of a banking institution in the space of two weeks demonstrates the vitality of the sector particularly financial and our economy in general,” he said.

He further stressed that the bank will place Djibouti in a more favorable economic position in the region and help strengthen trade relations with the Arab world. He said the central bank was providing the right environment for private banks to thrive.

“I can assure you Mr. President, the local banks tell me that their goal is also to play an important economic contribution to the creation of national wealth. And therefore , to improve the lives of our citizens the central bank of Djibouti is committed to motivate and support them in this will,” he said.

He urged international investors to take advantage of Djibouti’s position as a stable and leading regional financial, trade and transport hub. Appealing to foreign investors, he said, “a strong and stable currency, political stability, Geo-strategic position open to the outside world, a telecommunications system performance, and finally the existence of a port structure in the potential.”

“We hope that the arrival of Warka Bank in the financial Djibouti will contribute to further transform the banking landscape, making it more competitive by introducing a wider range of financial products and services, while respecting international law and regulations of the Central Bank of Djibouti which has continued to support us and advice, “he said finally.

(Source: Somaliland Press)

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Warka Fat Lady Begins Warm Ups

Last weekend two stories, one in Al Hayat the other in the Abu Dhabi paper The National, confirmed that 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 a year, this is the first time anything has been officially disclosed. Hayat cited Warka Bank Executive Director Mohammed al-Samarrai as saying that the merger has reached its “final stages.” A Standard Chartered official interviewed by The National was a bit more circumspect. He characterized the negotiations as “still in the early stages” and cautioned that “It’s not final until it’s absolutely final.”

It’s said that the opera isn’t over until the fat lady sings. While she hasn’t come out yet, it looks like she has already begun warming up backstage.

If the deal goes through, Standard Chartered will presumably be taking up the approximately 145 mn rights issue shares left over from Warka’s failed capital increase in early 2010. At IQD 1 per share, this would add IQD 145 mn to June 30, 2011 net equity of IQD 138 mn, bringing the total to IQD 283 mn. Share capital would increase to 250 mn, with the British bank holding a 58% stake.

In this scenario, book value per share would come to 283/250 = IQD 1.13.

Among the ISX-listed banks, Warka would become only the second to have a major international financial institution as a controlling shareholder. The first was Dar Es Salaam Bank, which is controlled by HSBC.

Dar Es Salaam trades at 7.0 times book value. The same rating for BWAI post-merger would mean the shares would reopen at 7 x 1.13 = IQD 7.92. Anyone who had bought at BWAI’s last traded price of IQD 1.26, got the 33.33% bonus, and taken up the 150% rights issue would be looking at a return of 710%. (Both original and bonus shares were eligible for the rights.)

The final act of this drama may turn out to have been well worth the price of admission.

Photo by: http://www.flickr.com/photos/aliens_ufo_proof_evidence/

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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)

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