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Need for Settlement Bank to Clear Toxic Assets
Economy, Business And Markets

Need for Settlement Bank to Clear Toxic Assets

The minister of roads and urban development has called for the establishment of a settlement bank to resolve the problem of toxic assets, Financial Tribune’s sister news website, Eghtesad News, reported on Thursday.
“Economic planning is rather impossible unless the banks are cleared of the toxic assets.” said Abbas Akhoundi,.
The first step taken by countries hit by financial crisis in 1997 and 2008 was to set up settlement banks to get rid of toxic assets from balance sheets of banks and help empower their struggling economies, he said, adding “similar institutions should be established in Iran and the Privatization Organization can take the lead.”
He regretted the fact that no authority in the banking industry has taken the initiative to effectively tackle the mountain of NPLs and outstanding receivables. “We have yet to realize that the problems of the banking system cannot be solved by issuing decrees and directives, but by effective planning.”
Akhoundi did not say what measures the present government has taken to recover the loans and how much, if any, of the long pending amounts had been repaid over the three years that President Hassan Rouhani took office.
Iranian lenders together are burdened by an estimated 938 trillion rials ($32.9 billion) of non-performing loans accumulated largely during the Ahmadinejad administration (2005-13). The figure doubles if restructured loans are added to the long list. The bad loans have seriously eroded the lending power of most state-owned banks, driving up the cost of money.

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