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HSBC looks to sell DES stake to cut Iraq presence
Aggregated Source: Shanghai Daily: Business

HSBC Holdings said yesterday that it is considering selling its majority stake in Dar Es Salaam Investment Bank, which has made it the main international lender in Iraq.

There has been speculation in the Iraqi banking market about the 70.1 percent holding for some time, and Simon Cooper, HSBC's chief executive for the Middle East and North Africa, said in April that its presence in Iraq was under review.

"Following a strategic review, it was decided to explore options for the disposal of HSBC's shareholding in DES (Dar Es Salaam)," the lender said in a regulatory filing in London, adding that it would not join a proposed capital increase for DES.

As part of a three-year global restructuring, HSBC has cut retail banking business in some Middle Eastern nations and merged its operations in Oman with a local bank. It has cut its Islamic banking operations.

Selling its DES stake could be complicated by the domination of Iraq's banking sector by two state-owned lenders - Rafidain and Rashid - with the rest divided among a large number of small players.

Iraq's security and political problems have put many global lenders off operating in the country, despite the agreed potential of its emerging banking system.

Standard Chartered has said it hopes to open branches in the country this year, and Citigroup Inc said on Monday that it would open a representative office in Baghdad.

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