State-owned Bank Sepah will offer 17% of its shares in Omid Investment Management Group, the bank’s investment arm, in the stock market on Saturday
The move comes after the Central Bank of Iran called on commercial banks to sell their shares in businesses inconsistent with their mandate i.e. lending to business and the people in need.
As per a notice seen on the Tehran Stock Exchange website, 16.486 billion shares of the investment company will be offered at a base price of 31,700 rials per share and buyers can either pay in one go or in installments.
Sepah CEO, Ayatollah Ebrahimi, earlier said that the bank will uphold regulatory requirements and end its non-banking operations – controversial practices for which most banks have come under mounting criticism over the years.
"Real estate estimated at 150 trillion rials ($424.9 million) are set to be sold in an auction in the near future," Ebrahimi said.
Sepah earlier tried to offer its shares in blocks but failed to find buyers. The group has investments in major projects including petrochemicals, cement, steel, power plants and stock brokerages.
Banks and credit institutions own an estimated 1,000 trillion rials ($2.8 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 distressed investments.
Non-banking activities of lenders have long been censured by prominent economists and senior government figures on the premise that it is a major risk to transparent banking that has
resulted in mountains of bad debts and non-performing loans.
Earlier Economy Minister Ehsan Khandouzi reiterated the role and significance of supporting feasible business plans and singled out banks for pouring billions into opaque projects in past.
"Transparency in the banking sector is a must," he stressed, adding that "banks need to embrace innovation in their investments and put a [permanent] end to non-banking businesses."
Elaborating the point, he added, "Henceforth the premise for assessing the performance of state-owned banks will be their verified progress in ending business operations" that have no correlation with banking per se.
