70159
Impacts of Cabinet Change on Public, Private Lenders
Impacts of Cabinet Change on Public, Private Lenders

Impacts of Cabinet Change on Iran Banks

Replacement of Ali Tayyebnia as the head of the Ministry of Economic Affairs and Finance will potentially impact Iranian lenders

Impacts of Cabinet Change on Iran Banks

A key change in President Hassan Rouhani's Cabinet for his second tenure will potentially impact both state-owned and private lenders, and subsequently influence the outcome of his central promise of reforming the beleaguered banking system.
Shortly after the inauguration ceremony for the president on Aug. 5 brought many foreign delegations to Tehran and was followed by wide-ranging negotiations to reestablish ties hampered by years of western sanctions, it was revealed that Ali Tayyebnia will not be seeking a second chance at helming the Ministry of Economic Affairs and Finance.
If the parliament were to confirm his nomination, Masoud Karbasian, who has just completed a relatively successful four years as the head of the Customs Administration, will replace the outgoing minister who enjoyed the rare distinction of being popular among both government and private sectors.
Karbasian, 61, will be the key player for implementing Rouhani's pledge of reforming the banking system that faces a myriad of problems arising from years of neglect and mismanagement during the former administration.
These problems include a crippling credit crunch that has seen up to 60% of the lenders' assets blocked and a lack of correspondent relations with top-tier international banks that remain wary of dealing with their Iranian counterparts for fear of potential US penalties.
For the most part, the new ministry hopeful seems to be picking up where Tayyebnia left off, looking to continue his plans that were constructive for the banking system even if not all of them came to fruition in the projected timespan.
Should he manage to gain the vote of confidence from lawmakers, Karbasian pledges to adhere to various aspects of the Sixth Five-Year Development Plan (2017-22) by reducing bank interest rates, increasing the capital adequacy ratio of banks, reclaiming bad assets and non-performing loans, and improving the outdated banking system by establishing acceptable corporate governance rules and conformity to standards among others.
Karbasian's proposed schemes mostly focus on state-owned banks and he promises to improve the capital assets of these lenders and follow up on shedding their excess assets held mostly in the real-estate sector.
This is while other plans of reducing the administration's indebtedness to the banks and completing an integrated banking database could help private lenders and increase government trustworthiness and transparency if seen to the finish line.
Owing to the huge shortage of capital faced by state-owned banks, his plan of increasing their capital assets has met with positive feedback.
According to official data, eight government-owned banks, including Bank Melli Iran, Bank Sepah, Bank Maskan and the Export Development Bank of Iran, saw their collective capitals doubled during Tayyebnia's term in office.
Hamid Pour-Mohammadi, the deputy head of Management and Planning Organization, announced on Wednesday that state-owned lenders' capital rose above 540 trillion rials ($14.2 billion) while BMI, Iran's largest lender that enjoys the lion's share of the capital increase, currently holds a total outlay of 190 trillion rials ($5 billion).
Gearing up for another eventful four years, private lenders, which are navigating in a difficult landscape, have outlined their demands and expectations from the administration.
Kourosh Parvizian, the head of the Association of Private Banks and Credit Institutions, has called on the administration and the parliament to join forces to remove unnecessary and faulty regulations, and execute unimplemented regulations.
"Removing obscurities from macro policies of the economy, especially monetary and financial policies" and reforming the structure of banking fees to increase the incomes of banks were part of the expectations of lenders, he added.
Parvizian also called for a comprehensive review of electronic payment systems and the way lenders establish their ties so that the connection of Iranian banking system with the international payment system could be paved and more correspondent ties are established.
While it is clear that the administration in its second tenure has lost one of its best and least controversial faces, it remains to be seen how well Tayyebnia's successor fills his shoes.
 

Short URL : https://goo.gl/wkwuhR
  1. https://goo.gl/vnBZGc
  • https://goo.gl/vdxh4w
  • https://goo.gl/AiK5Qy
  • https://goo.gl/bDJFGL
  • https://goo.gl/2WqSWj

You can also read ...

WTO Accession No More a Priority for Iran
Joining World Trade Organization is no longer a priority for...
Rouhani Sends Banking Reform Bills to Parliament
Following an approval by the Cabinet and a presidential...
One factor causing a drop in Chinese steel in Iran is their rising prices.
Chinese steel was everywhere in the world for the good part of...
Bill on Construction Quality Inevitable
In order to curb the construction of substandard buildings,...
Peugeot’s 301 model is on sale in Turkey for more than three years.
Iran Khodro dealers confirm that the new Peugeot 301 sedan is...
Iran’s per capita egg consumption stands at 198.
Hit hard by the H5N8 bird flu virus last year, the Iranian...
TSE’s Average P/E at 5.6
The average price to earnings ratio of Tehran Stock Exchange-...
IKCO Launches Taxi Made in China
Iran Khodro has unveiled the DongFeng S30 as part of a push to...

Add new comment

Read our comment policy before posting your viewpoints

Image CAPTCHA
Enter the characters shown in the image.

Trending

Googleplus