EghtesadOnline: Bank Melli Iran, the biggest lender, has released an inventory of 25 properties it owns to be divested in the fiscal year ending March 2023.
The main state lender, long under pressure from the businesses community and economic experts, says it is in the process of ending non-banking activities, concentrate on banking operations and bolster lending capacity.
As for the method of divestment, the BMI said it plans to divest stakes in listed companies via the stock market. For unlisted companies, the banks says it plans to hold auctions.
However, the bank did not succeed in selling shares via the bourse nor other ways in the last fiscal year (ended March 20), apparently due to the decline in the stock market.
It did sell 106 trillion rials ($392 million) and 27 trillion rials ($100m) worth of shares in fiscal 2020-21 and 2019-20, respectively.
The National Development Investment Group (a subsidiary of the BMI), Iran Khodro (the largest local automaker) Ayandeh Pouya Plan and Development Company, Madan Shekafan Tehran company (a mineral company) and Imen Tarabar Aria (a transport firm) were among the companies the BMI has divested.
BMI’s divestments are in accordance with law passed by the Majlis in 2015 based on which banks and credit institutions are obliged to annually divest at least 33% of their non-banking assets over three years. The obligation covers divestment of shares in listed companies and banks can use the earnings to boost capital.
Law stipulate that if lenders fail to abide by divestment rules, they have to pay 28% of their income from non-bank activities as tax during the first year of the implementation of the law. In subsequent years, 3 percentage points will be added to this rate until it reaches a maximum 55%.
Bank assets have piled up over the years mainly due to impaired loans, bad debts, settlement of government debts to banks, closure of branches and failed investments.
Selling nonfinancial assets also are in line with obligations announced by the government requiring banks to give up non-bank operations and focus on their original mandate, namely lending to manufacturers and businesses.