Banks and credit institution took over possession of more than 1,700 properties from businesses that defaulted on their loans, said the secretary of the Coordination Council of State and Privatized Banks.
The data was published by the Iran Small Industries and Industrial Parks Organization (ISIPO), Alireza Qeitasi said. Details and names of defaulting companies were not available.
However, he noted that “acquiring the estates does not necessary mean their business are shut,” ISNA reported.
The requisitioned properties are mostly development projects and places of business and almost 60% are operational after coming under banks’ ownership.
Banks have come under mounting criticism for appropriating manufacturing units and disrupting production particularly when most are grappling with huge challenges in procuring raw material and finding markets due to high inflation and deteriorating economic sanctions.
Banks have been banned from non-bank operations and are required to sell nonfinancial assets and focus on their original mandate, namely lending to manufactures and businesses.
Qeitasi stressed that lenders are willing to cede the acquired assets. “We signed a MoU in March with the ISIPO announcing readiness to divest properties.”
The number of acquired properties was also confirmed by Mohammad Reza Jamshidi, secretary-general of the Iranian Private Banks' Association.
The senior banker said government-controlled banks are in charge of acquiring the majority of assets. “Private banks hardly own 19 defaulting companies,” Jamshidi told ISNA.
“Most of these properties are controlled by government-affiliated banks. This is because private banks are less involved in financing manufacturing units.”
Proposal to the Gov’t
To help banks give up non-financial activities, Abbas-Ali Haqqani, an economist, recommend the government set up investment funds into which all non-financial assets of banks would be transferred.
“The proposal is that the government set up two funds: one an investment fund for holding banks’ stakes in companies and anther a real estate fund for transferring the requisitioned properties,” he was quoted as saying by IBENA, the news agency of the Monetary and Banking Research Institute.
Haqqani said by doing so the government can list the funds in the stock market and relinquish assets held therein to the public.
Lenders’ non-banking assets, including stake 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.
“Banks have sold almost 330 trillion rials ($1.32 billion) in assets in the past three years, including 170 trillion rials ($680 million) in shares and 150 trillion rials ($600 million) in assets,” the official said.
Memarnejad acknowledged that the extended decline in the stock market has impeded lenders' efforts to divest, noting that they are waiting for better market conditions to resume divestiture.
Lenders’ 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.
