EghtesadOnline: The managing director of Iran Mercantile Exchange in a letter to banks announced that the IME is willing and able to help them divest their non-financial assets.
Addressing managers of 27 state and private lenders, Hamed Soltaninejad said the IME has put in place appropriate mechanisms for selling banks’ assets, the IME news agency, imereport.ir said.
The letter refers to recommendations by the Monetary and Banking Research Institute about tapping into the capacity of the IME to handle the non-banking assets.
“The legal and operational infrastructure at the IME and the market” can handle the sale of banks’ excess properties,” Soltaninejad wrote.
The decision apparently has support from the Central Bank of Iran and the current and former heads of Securities and Exchange Organization, the capital market regulator.
Lenders’ non-banking assets, including stakes in companies plus real estate, are estimated at 900 trillion rials ($3.6 billion), according to Abbas Memarnejad, the deputy economy minister for banking, insurance and state-owned companies said earlier. This amount is the value of assets owned by banks and credit institutions affiliated to the government.
“Banks have sold 330 trillion rials ($1.32b) in assets in three years, including 170 trillion rials ($680 million) in shares and 150 trillion rials ($600 million) in assets,” the official said.
Banks have been banned from non-bank operations and are required to sell nonfinancial assets and focus on their original mandate, namely lending to manufacturers and businesses.
The CBI in December announced guidelines for divesting non-financial assets of banks and credit institutions as per which if they fulfill “all the requirements and formalities for divesting assets,” they will be exempt from penalties stipulated by law.
The guidelines stipulate that divestment should be only via auctions for which Soltaninejad said the IME has robust infrastructure.
Loan Default and Seizures
Banks’ assets have piled up over the years mainly due to bad debts, settlement of government debts to banks, closure of branches and failed investments.
Citing data published by the Iran Small Industries and Industrial Parks Organization (ISIPO), Alireza Qeitasi, the secretary for Coordination Council of State and Privatized Banks, said earlier lenders own more than 1,700 properties taken over from businesses that defaulted on their loans.
The properties are mostly development projects and business units. It has been reported that 60% of the businesses are still operating after coming under banks ownership.
However, banks have come under mounting criticism for seizing manufacturing units and disrupting production particularly when most businesses are grappling with a myriad of challenges in procuring raw material and finding markets due to high inflation and the US economic sanctions. The coronavirus has made a bad situation worse.
Government-controlled banks are in charge of the majority of assets, according to Mohammad Reza Jamshidi, secretary-general of Iranian Private Banks' Association. “Private banks own 19 defaulting companies.”
“Most of these properties are controlled by the government-affiliated banks because private lenders are less involved in financing manufacturing units,” he was quoted as saying.