The Majlis Research Center has proposed amendments to rules to help ease the sale of excess assets of state-owned banks.
In a report seen on the MRC website, the influential body suggested that the government take responsibility of selling the assets. As per current laws, state banks are obliged to sell their excess assets, based on the decision of the head of their general assembly -- the economy minister.
The report noted that the rules are pretty vague and open to wide interpretations, as it is not clear that the banks’ GE should decide about which assets are not needed or should only allow selling the assets.
Law also requires lenders to use the money raised from asset sales for financing infrastructure projects or give it to profit-making enterprises.
The parliament’s research wing proposed revising the rules in ways that the government should be responsible for selling the bank assets if they (lenders) fail to do so within six months after announcing the revised rules.
"The government must transfer the proceeds to the banks immediately after the assets are sold…lenders must be obliged to use such funds to support business projects that are export-based and/or are labor-intensive."
Loan burdens on the struggling banking sector, tough procedural mechanisms plus the worsening economic climate are impeding the sale of excess bank assets rendering the task almost impossible.
Some observers say that selling the assets exposes banks to risks and hurls them at the forefront of investigative bodies that later determine whether everything was done in the framework of law and transparency.
Reluctant Lenders
They concur that banks are reluctant to get rid of the excess assets because when they do they must sell to production sectors that are usually not making profit in the present dire economic conditions.
Economy Minister Ehsan Khandouzi said earlier that private and state-owned banks sold 670 trillion rials ($1.8 billion) in surplus assets since 2015.
“Shares in non-bank businesses accounted for almost half the assets and the rest was overextended real estate,” he said.
Bank Saderat accounted for 22% or 145 trillion rials ($408.45 million) of the assets, followed by Bank Melli 21% or 143 trillion rials ($402.8m), Bank Tejarat 110 trillion rials ($309.8m) and Bank Mellat 96 trillion rials ($270.4m).
Bank Refah with 48 trillion rials ($135.2m), Bank Sepah 47 trillion rials ($132.3m) and Bank Keshavarzi with 40 trillion rials ($112.6m) were the other lenders who sold their assets.
The minister said earlier that progress in “ending non-banking business will be the main criteria” for assessing the performance of bank CEOs. “We have informed the CEOs what can and should be done about selling the assets.”
“We told them to focus on selling large and appreciated assets rather than small holdings. For example, Bank Melli should free up 300 trillion rials ($850m) of its shares in Shazand Petrochemical Company and Bank Sepah needs to sell real estate to the tune of 30 trillion rials.”
