5 Armed Forces-Linked Banks to Merge
EghtesadOnline: The Central Bank of Iran said Saturday that plans for merging five banks and credit institutions affiliated to armed forces with the state-owned Bank Sepah is in motion.
A notice published on the CBI website says the measure is taken in the follow-up to earlier decisions by the Money and Credit Council - a major monetary decision-making body - and the Supreme Council of Economic Coordination – a body comprising heads of three branches of government formed at the behest of Leader Ayatollah Seyyed Ali Khamenei to address major economic issues.
"As part of efforts to centralize the capability and capacity of the entities, namely Ansar Bank, Bank Hekamt Iranian, Mehr Eqtesad Bank, Ghavamin Bank, and Kosar Credit Institution are being merged into a more efficient and stable bank," the CBI said.
The regulator said comprehensive studies have been undertaken to ensure full protection of rights of clients, depositors, shareholders, employees, and beneficiaries, according to Financial Tribune.
The move is seen in line with broader CBI plans to reform the struggling banking sector and promote efficiency. “A comprehensive plan has been drafted in cooperation with representatives from relevant bodies to reform the banking system and regulate the monetary market,” the notice said.
Reports about bank mergers had been making the rounds for some time but gathered pace after calls for addressing loss-making lenders became more vocal. President Hassan Rouhani, addressing the Central Bank of Iran annual general assembly meeting last Tuesday expressed hope that the merger will help reform the bloated banking industry.
Retrospective Rules
According to the notice, offering banking services to depositors and borrowers of merged lenders will continue as per rules of Bank Sepah and the clients will receive services in the framework of earlier borrowing and deposit contracts.
Likewise, in order to protect the rights of shareholders of the merged banks and credit institutions, a mechanism is in place, in coordination with the Securities and Exchange Organization, to decide on the shares of the merging entities.
Within the proposed framework, each entity is authorized to decide about their shareholders’ fate and shareholders are assured of their rights.
Employees working for the merged entities are also assured that the merger will not cause any disruption in their career and their rights are fully guaranteed.
The CBI expressed the hope that the merger will be a significant step forward toward stability and transparency in the banking system.