Warka’s Good News is Bad News

Warka’s Good News is Bad News

Posted on 19 October 2011. Tags: BWAI, ISX, Standard Chartered

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The
Warka Bank shareholders meeting originally scheduled for October 6 was
held last Wednesday (Oct 12). From what I have heard from various
sources, there was some good news and some bad news.
The good news
is that the bank will be getting an IQD 100 bn loan from the Central
Bank of Iraq (CBI). This will make it possible for the Registrar and
the Securities Commission to allow BWAI to resume trading.
The
Registrar’s approval is necessary because it has a lien on the shares.
As long as this is in place, transfer of ownership is blocked. The
existence of this lien was made public in a recent communication from
the CBI posted on the Iraq Stock Exchange (ISX) website. The central
bank, in response to a question from the ISX regarding Warka’s status,
stated that the Registrar had blocked trading in the shares but did not
say why.
Normally a lien might be put on someone’s property if
title was in question or if the property had been posted as collateral.
It’s hard to see what the rationale could be in this case. Why freeze
the assets of all the minority shareholders?
The bad news is the
same as the good news: Warka will be getting IQD 100 bn from the CBI.
Evidently the potential deal with Standard Chartered, which would
presumably have seen the British bank taking up almost IQD 150 bn in
rights issue shares, is not going to be finalized in the near future.
(There’s more on the Standard Chartered story here.)
My earlier expectation of a big jump in BWAI’s share price on the resumption of trading now seems likely to be disappointed.