Following the recent rally in gold prices, Bank Melli Iran decided to auction a portion of its bullion that includes a limited edition of Bahar Azadi coins as part of an effort to shed excess assets.
The first phase of the auction took place on Monday through BMI’s subsidiary, Bank Kargoshaee.
Buyers are offered such rarities as Five Azadi bullions (weight 40.7g), Two and a Half Azadi (weight 20.34g), and BMI’s commemorative coin collections.
“Five Azadi coins were minted in 1979 with a limited number sold in the market,” Masoud Soleimani, head of Bank Kargoshaee’s central branch told the Financial Tribune.
The auction will last for three days, according to Soleimani. “It could be extended until all coins are sold.”
“It is not officially stated but I think by putting gold coins on auction Bank Melli is seeking to reduce the amount of its excess assets,” he said noting that lowering banks’ excess assets is on the government agenda for now.
Iranian lenders have been urged to reduce their non-banking activities and shed excess assets to raise funding for struggling businesses. The government has also given priority to financing the large number of small and medium enterprises.
A company has been established by the government for Selling Banks’ Excess Assets (FAM) to help banks sell their excess properties. It sold 120 properties with a total value of 500 billion rials ($16.5 million) in the last Iranian fiscal year that ended in March.
“The total value of gold coins on auction will be considerable,” Soleimani said without elaboration.
The packages also include one-gram Azadi gold coins, half Bahar Azadi and quarter Bahar Azadi which are offered at 3%-5% lower than market prices.
Azadi hit a six-month high on Saturday and was sold for 11.18 million rials. The benchmark coin bought 11.16 million rials on Monday, with the half Azadi coin fetching 5.5 million rials.
Bank Kargoshaee is the only bank authorized to hold gold auctions, according to Soleimani. “We also hold auctions for other banks that are willing to sell their gold, silver and rugs.”
The last time the Central Bank of Iran put gold coins on auction through Kargoshaee was in 2012.
Established a little less than a century ago, Kargoshaee specializes in retail gold deposits and selling it. The bank offers services to both Iranian and foreign traders, as well as holding gold extracted from domestic mines.
The Bank Melli’s subsidiary also offers interest-free loans on easy terms. “Currently we pay loans to 600-700 applicants per day.” Loans are secured against the applicants’ gold which is kept in the bank and returned to the borrower after the loans are repaid.
