State-owned Bank Melli Iran, the largest domestic lender, says it sold assets worth 56 trillion rials ($200 million) in the first six months (March 20-Sept. 21) of the current fiscal year.
The divested assets included non-financial assets and shares owned by the bank and its subsidiaries, the lender’s news portal reported.
Shares of BMI subsidiaries sold in the stock market accounted for the lion’s share of the divested assets. The lender said it earned 48.8 trillion rials ($171 million) from that move. The value of BMI non-financial assets, such as real estate, was 7.7 trillion rials in H1.
Data indicate that the lender is moving ahead as planned in selling its assets. Divested assets in H1 indicate 218% growth compared to the total sold shares in the whole of last fiscal year (March 2019-20).The bank had sold assets worth 17.4 trillion rials ($62 million) last year.
Selling nonfinancial assets 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 manufactures and businesses.
The BMI also has plans to divest 13% of its stake worth 230 trillion rials ($820 million) in its investment wing, the National Development Investment Group.
Non-banking activities of Iranian lenders (state and private) have long been criticized by business leaders and economic experts on the premise that it is a major obstacle to transparency in the key sector.
Iranian banks have been mandated by articles 16 and 17 of the Law on Removal of Obstacles to Competitive Production and Boosting the Financial System to privatize at least 33% of their surplus assets annually to end ‘non-banking activities’.
Task Force
As per regulations, state-owned banks are obliged to form a special task force to facilitate the lethargic divestiture process that has been a long time coming.
Lenders are urged to concentrate by and large on funding the production sector rather than owning or managing companies, and in some cases involvement in the lucrative but controversial real estate sector.
Banks and credit institutions reportedly own 1,000 trillion rials ($3.5 billion) in superfluous 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.
Abdolnasser Hemmati, governor of the Central Bank of Iran, earlier called on lenders to tap into the stock market to divest shares, let go of non-financial assets and focus on their primary duties. The CBI monitors the divestiture process.
