The Central Bank committed to company recommendations

[Butifldrm]

The Central Bank committed to company recommendations (Kbmg) on Warka Bank

Created on Wed, 17 October 2012 11: 10 | |

Baghdad/Orr news

The CBI said its recommendations will emerge by global analysis (Kbmg) on Warka Bank Al-Ahli for investment, noting that the Bank Act be applied in accordance with the recommendations.

Company completed (Kbmg) last month analysis of external financial audit report Warka Bank Al-Ahli for investment which is under the tutelage of the Central Bank of Iraq half a year ago.

Deputy Bank Governor Mohammad Saleh appearance "report (Kbmg) global analysis will arrive in the Central Bank and will include a set of recommendations in accordance with those recommendations, the Bank will apply its law", adding that "international company asked the Central Bank of Iraq and of foreign financial auditor of Warka Bank sitting for the purpose of discussing the report technically before writing recommendations."

The CBI had decided to put the Warka Bank Al-Ahli for investment under guardianship in March after suffering a financial setback and its inability to pay its creditors. Warka Bank loans and financial reached over 500 billion dinars, with depositors ' funds amounted to nearly 300 billion dinars.

http://www.microsofttranslator.com/bv.aspx?from=ar&to=en&a=http%3A%2F%2Fwww.uragency.net%2F2012-03-11-16-31-52%2F2012-03-11-16-33-57%2F11443-kbmg.html

[DayGee]

Looks to me like Warka is on the hook for 500 million, and only has 300 million. Sounds like someone is gonna get stiffed a total of 200 million. Let's hope it isn't foreign investors but I can't imagine they're at the top of the list to pay out.

[82Corp.]

Looks to me like Warka is on the hook for 500 million, and only has 300 million. Sounds like someone is gonna get stiffed a total of 200 million. Let's hope it isn't foreign investors but I can't imagine they're at the top of the list to pay out.

If ICBdoes not cover stated shortfalls it will hurt future investments from foreignersand Iraq future economic growth.

[DayGee]

If ICBdoes not cover stated shortfalls it will hurt future investments from foreignersand Iraq future economic growth.

Iraqs future growth is tied to people bringing in billions for oil and infrastructure, not retail investors with two grand in Warka that are only trying to take money out of Iraq via interest rates and currency appreciation.

Good luck, but I foresee a lot of Warka investors losing 100% of their investment.

[Bristin]

Iraqs future growth is tied to people bringing in billions for oil and infrastructure, not retail investors with two grand in Warka that are only trying to take money out of Iraq via interest rates and currency appreciation.

Good luck, but I foresee a lot of Warka investors losing 100% of their investment.

I have heard many in Iraq say, including Shabibi, that Iraq’s long term prosperity will be based on the development of all of its business sectors, not just the volatile oil sector.

These same people also say that Iraq needs a strong banking system.

As to Warka, I seriously doubt that Warka is trying to survive on “retail investors with two grand...” No US or European bank could do that.

With 300 billion in depositor funds, that is a lot of retail investors at two grand a pop. It logically makes no sense that Warka is relying on retail investors.

Were that the case I believe that KMPG’s recommendation would be to close Warka down and distribute its available funds and liquidated assets to depositors, secured creditors, unsecured creditors and finally to investors in that order. When the money runs out, the ones downstream will take the hit. What you don’t see are Warka’s total assets. They must have some, if nothing more than physical infrastructure.

My read of the posting that started this thread is that KMPG will make a set of recommendations for the preservation, sale or partnering of Warka with a stronger bank inside or outside of Iraq. I believe this because Warka has a large network of apparently modern ATM machines throughout Iraq that Iraq needs and for this reason alone may be too big to fail. But more importantly, for the CBI and the GOI to allow a bank to fail would be detrimental to Iraq’s express desire to build a strong banking system.

The Iraq banking system seems too fragile at this stage to allow a bank to fail when it can be saved by pumping in cash and reforms. Iraq law allows the GOI to step in and bail Warka out if it wants to do so. CBI only needs to make the request.

When you say “investor”, I assume that you mean Warka depositors not “investors” who own shares of Warka stock. I agree that stock holders may be in for a long night, but not so long for depositors.

Thanks for your post.

[DayGee]

I'm not saying that Warka is/was surviving on 2 grand a pop foreign depositors. I'm saying they don't care about them, so they're not likely to be high on the list of people to pay out if Warkas assets have to be liquidated.

Your too big to fail comment doesn't seem to make much sense. If Warka goes under those ATMs don't disappear. They'll just be sold to a different bank.

Not so long for depositors? Do you really believe that or are you just trying to reassure yourself? I had money in a US bank that went under and it took 7 years to get it back.

That was an American depositor, with an American bank, that was federally insured.

With Warka you're talking about an Iraqi bank, a foreign depositor, and zero insurance. Again, good luck.

[Bristin]

I'm not saying that Warka is/was surviving on 2 grand a pop foreign depositors. I'm saying they don't care about them, so they're not likely to be high on the list of people to pay out if Warkas assets have to be liquidated.

Your too big to fail comment doesn't seem to make much sense. If Warka goes under those ATMs don't disappear. They'll just be sold to a different bank.

Not so long for depositors? Do you really believe that or are you just trying to reassure yourself? I had money in a US bank that went under and it took 7 years to get it back.

That was an American depositor, with an American bank, that was federally insured.

With Warka you're talking about an Iraqi bank, a foreign depositor, and zero insurance. Again, good luck.

Can you tell me whether you hold physical dinar? I don't want to know the amount. Just a yes or no and it will help me to better respond.

Thanks,

[MrFnHappy]

I'm not saying that Warka is/was surviving on 2 grand a pop foreign depositors. I'm saying they don't care about them, so they're not likely to be high on the list of people to pay out if Warkas assets have to be liquidated.

Your too big to fail comment doesn't seem to make much sense. If Warka goes under those ATMs don't disappear. They'll just be sold to a different bank.

Not so long for depositors? Do you really believe that or are you just trying to reassure yourself? I had money in a US bank that went under and it took 7 years to get it back.

That was an American depositor, with an American bank, that was federally insured.

With Warka you're talking about an Iraqi bank, a foreign depositor, and zero insurance. Again, good luck.

WOW, that blows me away. The implications of what type of difficulties you may have encountered due to lack of access to your money is mind boggling. I would have been beyond pissed after 7 weeks, and I can't even fathom 7 years.

As far as Warka, I personally was never comfortable enough to put my money there.

I know there are quite a few folks out there to have claimed they were making great returns on Warka CDs, which I don't doubt.

The real question lies in IF these folks were, or are able to access those funds right now. Can you wire transfer money to your US account today?

[Goodlife]

WOW, that blows me away. The implications of what type of difficulties you may have encountered due to lack of access to your money is mind boggling. I would have been beyond pissed after 7 weeks, and I can't even fathom 7 years.

As far as Warka, I personally was never comfortable enough to put my money there.

I know there are quite a few folks out there to have claimed they were making great returns on Warka CDs, which I don't doubt.

The real question lies in IF these folks were, or are able to access those funds right now. Can you wire transfer money to your US account today?

No we cant

But I dont want to either. Warka investors have not lost any money at all. Its still the best place for my investment as far as I am concerned.

I ditched cash a few years ago and very pleased I did. Dont regret it all. Doing just fine in Warka, making good compounding interest. I'm there for the long haul and the trip isn't over.

The money isnt coming out until there is a significant improvement in the rate and that hasn't happened so it doesn't matter that I cant get it out.

The investment is there for reason. And if i have to wait a bit, thats ok.

I do not see Iraq letting the biggest private bank in Iraq fall over. The CBI took it over for a reason. If they didnt care about Warka then why would they bother in the first place?

It is a good thing that the CBI took guardianship. Doesn't get much better than the govt looking after a bank in any country.

The scenario has to play itself out but lets have some good reasoning on the subject.

[DayGee]

No we cant

But I dont want to either. Warka investors have not lost any money at all. Its still the best place for my investment as far as I am concerned.

I ditched cash a few years ago and very pleased I did. Dont regret it all. Doing just fine in Warka, making good compounding interest. I'm there for the long haul and the trip isn't over.

The money isnt coming out until there is a significant improvement in the rate and that hasn't happened so it doesn't matter that I cant get it out.

The investment is there for reason. And if i have to wait a bit, thats ok.

I do not see Iraq letting the biggest private bank in Iraq fall over. The CBI took it over for a reason. If they didnt care about Warka then why would they bother in the first place?

It is a good thing that the CBI took guardianship. Doesn't get much better than the govt looking after a bank in any country.

The scenario has to play itself out but lets have some good reasoning on the subject.

You haven't made a cent in interest until you've actually gotten your money out of Warka, which at this point you cannot do. Until then it's just numbers on a screen. If you want to send me 10 grand ill be happy to send you a statement every month showing your interest accruing. Hell, ill give you 50% interest. But I won't ever let you withdraw the money, just like Warka currently won't.

Warka doesn't have enough assets to cover their liabilities. That's a fact. I just don't see the CBI giving Warka hundreds of millions of dollars to cover their liabilities. And to be quite frank, I don't see them giving Warka a single cent to make good on the deposits of foreign currency speculators. This is a poor third world country with no infrastructure and a corrupt government that can't ever get anything accomplished. If you think that's a recipe for fair, honest, stable banking then I don't know what to tell you, except good luck.

I think the most likely outcome is that the CBI sells off Warkas assets, either to another bank or buy them themselves (probably at bargain basement prices). Then they'll start paying off depositors, but it'll take years and years and its not likely Americans will be high on that list, possibly resulting in them getting nothing. That's exactly what would have happened to me in the 80s if it wasn't for FDIC, to pretend it couldn't happen in Iraq seems like sticking your head in the sand.