Banks Sell $1.8b Surplus Assets

EghtesadOnline: Bank Saderat accounted for 22% or 145 trillion rials ($408.45 million) of the assets, followed by Bank Melli with 21% or 143 trillion rials ($402.8m ), Tejarat Bank 110 trillion rials ($309.8 m) and Bank Mellat 96 trillion rials ($270.4m).

News ID: ۷۵۲۰۶۰

07 December 2022

Private and state-owned banks have sold 670 trillion rials ($1.8 billion) in surplus assets since 2015, the Economy Minister Ehsan Khandouzi said.

“Shares in non-bonk businesses accounted for half the sold assets and the remaining half was overextended real estate,” Khandouzi said in a meeting with lawmakers on Tuesday, IBENA reported.

Bank Saderat accounted for 22% or 145 trillion rials ($408.45 million) of the assets, followed by Bank Melli with 21% or 143 trillion rials ($402.8m ), Tejarat Bank 110 trillion rials ($309.8 m) and Bank Mellat 96 trillion rials ($270.4m).

Refah Bank with 48 trillion rials ($135.2m), Bank Sepah 47 trillion rials ($132.3m) and Bank Keshavarzi with 40 trillion rials ($112.6m) were the other lenders.

The minister stressed that banks' progress in ending non-banking business will be the main criteria for assessing the performance of CEOs. “We met all CEOs of banks to explain what needs to be done about selling the excess assets.”

He said “We required them to focus on selling large and appreciated assets rather than the small holdings. For example, Bank Melli should free up 300 trillion rials ($850m)  of its shares in Shazand Petrochemical Company and Bank Sepah is required to sell assets to the tune of 30 trillion rials.”

State-owned Bank Sepah said last week it had sold 17% of its stake in Omid Investment Management Group, the bank’s investment arm, in the share market.

According to Sepah’s CEO, Ayatollah Ebrahimi, the bank will uphold regulatory requirements and is in the process of terminating non-banking operations -- controversial practices for which most banks have come under strong criticism over the years.

"Real estate worth an estimated 150 trillion rials ($424.9 million) are set to be offered in the near future," Ebrahimi said without elaboration.

Banks and credit institutions own an estimated 1,000 trillion rials ($2.8 billion) in non-financial assets, which have piled up over the years mainly due to impaired loans, bad debts, settlement of government debts to banks, branch closures and distressed investments.

Non-banking activities of lenders have long been censured by prominent economists and senior government figures on the premise that it is a major hindrance to healthy and transparent banking that have resulted in mountains of bad debts and non-performing loans.

Earlier Khandouzi reiterated the role and significance of supporting feasible business plans and singled out banks for pouring billions into opaque projects.

"Transparency in the banking sector is a must," he stressed, adding that "banks need to embrace innovation in their investments and put a [permanent] end to non-banking businesses."