BAGHDAD, (Reuters) – Standard Chartered Plc is in talks to buy a stake in Warka Bank, one of Iraq’s biggest private banks, a central bank official said on Monday.
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.
Hassan al-Haidari, a central bank advisor, said the London-based Standard Chartered had been in negotiations with Warka for the past 3-4 months.
“There are talks with them. It’s been going on for a while,” Haidari told Reuters.
“They (Standard Chartered) wanted more than 50 percent but they (Warka) wanted (to give) less than 49 percent.”
Standard Chartered declined to comment.
Abdul-Aziz Hassoun, executive director of the Iraqi Private Banks League, an independent organisation to support private banks, 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.
Iraq has seven state-owned banks, 23 private banks and eight Islamic private banks, according to the central bank website.
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.