Properties of Banks Sold for $770m

EghtesadOnline: The Deputy for Banking and Insurance Affairs at the Economy Ministry said during the one year between December 2018-19, 100 trillion rials ($770 million) worth of excess property of banks was divested.

News ID: ۷۴۶۹۰۲

12 March 2019

In a statement responding to a report by a local newspaper that cast doubts on the ability of the government to rid the struggling state banks of excess property, the agency said the excess properties came into existence via several ways, such as borrowers defaulting on loans, settlement of government arrears to lenders and investments by banks themselves.

The statement recalled the law that obliges banks to sell their excess property within three years and notes that the deadline has not come yet.

"The Ministry of Economic Affairs and Finance, as a representative of the government for state banks, has always insisted on implementing the law as a pillar of banking reforms, direct banks toward the main banking activities and empower their lending," the statement published on the ministry website reads, according to Financial Tribune.

Apart from plans to reform the limping banking sector, the government has launched a program to sell excess property of state banks.

According to Economy Minister Farhad Dejpasand, a one-year program is underway for 10 government-owned banks (including the biggest lenders) to relinquish excess assets–mostly real estate – and increase cash reserves.

Dejpasand announced a figure for the excess property holdings, saying based on the latest price evaluations it is close to 1,000 trillion rials ($7.7 billion).

The Central Bank of Iran said earlier this month the merger of five banks and credit institutions affiliated to the armed forces with Bank Sepah is in the making.

As part of efforts to centralize the capability and capacity of lenders, namely Ansar Bank, Bank Hekamt Iranian, Mehr Eqtesad Bank, Ghavamin Bank, and Kosar Credit Institution are being merged and the complex process should be over by next summer.