BMI Sells $113m in Nonfinancial Assets

EghtesadOnline: State-owned Bank Melli Iran, the largest domestic lender, says it ceded nonfinancial assets worth 26.13 trillion rials ($113 million) in the first five months (March 20- August 21) of the current fiscal year.

News ID: ۷۵۰۸۱۳

26 August 2020

The divested assets were almost three times higher than those sold in the whole of last year, according to the BMI  news portal.

Selling nonfinancial assets are in line with obligations announced by the government requiring banks to give up non-bank operations and focus on their original mandate, namely lending to manufactures and businesses, it said.

The bank’s public relations office said it divested nonfinancial assets worth 11 trillion rials ($47m) in the last fiscal year.

Among the key assets sold was a mineral company.  BMI had 81% stake in Madan Shekafan Tehran company, which was bought by a private firm in an auction in February.

The government wants lenders to concentrate by and large on funding the production sector rather than owning or managing companies, and in some cases involvement in the lucrative but controversial housing sector.

Non-banking activities of lenders have long been rebuked by economic experts and business leaders on the premise that it is a major obstacle to transparency in the key banking sector.

As per regulations, state-owned banks are obliged to form a special task force to facilitate the lethargic divestiture process that has been a long time coming.

Phased and Logical

BMI said it continues to divest its assets within a logical, phased and legal process. Despite the bank’s efforts, however, a number of divestiture schemes have failed due to a variety of factors, namely lack of buyers and demanding potential buyers to keep workers on their payrolls after taking control of the companies and factories.

Banks and credit institutions are said to own 1,000 trillion rials ($4.3 billion) in nonfinancial assets, which have piled up over the years mainly due to impaired loans, bad debts, settlement of government debts to banks, branch closures and failed investments.

Economy Minister Farhad Dejpasand earlier spoke about a one-year program based on which government-owned banks are required to relinquish their non-financial assets.

Abdolnasser Hemmati, governor of the Central Bank of Iran, earlier called on lenders to tap into the stock market to divest shares, let go of non-financial assets and focus on their genuine, but long delayed, duties.