HSBC Holdings Plc said on May 18, it was in talks to buy a majority stake in Iraq's Dar Es Salaam Investment Bank as a way to expand into Iraq as it rebuilds after war. HSBC did not give financial details of the proposed deal, which an industry source said should be completed by the end of July. HSBC has been in talks with Dar Es Salaam at least since July when the Iraqi central bank said it had received a request to approve HSBC's purchase of a 51 percent stake from the Khudairy family. "In partnering with Dar Es Salaam Investment Bank, which has been operating successfully for more than five years, HSBC believes that it can create a leading personal and commercial banking service," HSBC said in a statement.
Though it is billed as an investment bank, Dar Es Salaam is a commercial lender with personal banking operations.
The now disbanded US-led occupation authority gave HSBC, Standard Chartered Plc and the National Bank of Kuwait permission last year to set up in Iraq. Continued violence in the country has set back plans to open branches, and HSBC does not yet have operations in Iraq.
Foreign banks were banned from Iraq throughout 35 years of Baathist rule. Saddam Hussein allowed private Iraqi banks to operate in the 1990s, but a crippling economic embargo and over-regulation damaged the system, which also includes two main state banks.
HSBC operates in 77 countries and has done business in the Middle East since 1889, the London-based bank said. HSBC stock closed up 0.2 percent at 867-1/2 pence.
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