The government-owned Bank Melli Iran said it divested its non-financial assets worth 17.4 trillion rials ($102 million) in the last fiscal year (March 2019-20).
Among the important properties that were divested was a mineral company. BMI had a 81% stake in Madan Shekafan Tehran company, which was bought by a private company in an auction in February, the bank’s news portal reported.
It said the divestitures were in line with legal obligations announced by the government requiring banks to give up non-bank operations and focus on their original mandate, including lending to manufactures and businesses.
The government wants lenders to concentrate primarily on funding the production sector rather than owning or managing companies. This, it says, can be realized by cleaning up banks’ non-financial assets, most of which are underperforming and loss-making.
Non-banking activities of banks have long been condemned by economic experts and business leaders on the grounds that it is a major hindrance to openness to transparent banking.
As per regulations, state-owned banks are obliged to form a special task force to facilitate the divestiture process that has been a long time coming.
BMI, the biggest domestic lender, said it continues to offload property within a logical, staged and legal process. Despite the bank’s efforts, however, a number of divestitures have flopped due to a variety of factors, namely lack of buyers and requiring them to keep workers on their payrolls after buying the companies and factories.
Last November the lender found no buyer for its block of shares in one of its affiliates -- the National Development Investment Company. BMI says it wants to divest shares worth 230 trillion rials ($1.3 billion) in the company.
It said it could not find buyers for some of its real estate despite the fact that it upheld all the legal formalities, including publishing tender notices in the print media and holding auctions.
$6 Billon Target
Banks and credit institutions reportedly own 1,000 trillion rials ($6 billion) in non-financial assets, which have piled up over the years mainly due to impaired loans, bad debts, settlement of government debts to banks, branch closures and failed investments.
Economy Minister Farhad Dejpasand earlier spoke about a one-year program based on which government-owned banks are required to relinquish their non-financial assets and increase cash reserves.
CBI Governor Abdolnasser Hemmati this month urged lenders to tap into the stock market to divest shares, get rid of non-financial assets and focus on the real tasks of banking.
In a directive to CEOs of banks and credit institutions, he told them to use the opportunity created by the growing public tendency to invest in stocks.
