Two Banks’ Return to TSE Triggers Turmoil

EghtesadOnline: The long wait finally came to an end on Wednesday, as two major banks’ frozen stock tickers reopened on Tehran Stock Exchange after a year and a half.

News ID: ۷۸۲۱۴۳

17 March 2018

This is great news for frustrated investors, as they can finally free their blocked money. It’s just that there’s not much left of it!

Bank Saderat Iran’s shares, for starters, were being traded at 1,005 rials each on July 19, 2016, before it was barred from trading by the Securities and Exchange Organization for delaying the release of its financial details. This Wednesday’s close, however, saw it drop 49.25% to 510 rials, basically wiping half of its investors’ capital.

Each dollar was traded at 48,120 rials in Tehran on Wednesday, according to Financial Tribune.

Over 469.82 million “BSDR” shares were traded on Wednesday valued at 239.45 billion rials ($4.98 million). Sellers made up 47% of the trade, with speculators jumping to acquire the bank’s shares at rock-bottom prices. Buying can become more attractive as prices drop further later on.

The significantly smaller Bank Parsian had an easier time. Its trading symbol was frozen on November 5, 2016, while its shares were traded at 1,145 rials. Its Wednesday reopening saw the price drop 10.24% to 1,026 rials.

“BPAR” trading for the day amounted to 54.53 million shares worth 55.97 billion rials ($1.16 million).

The banks’ unruly return was TSE’s only highlight on Wednesday, as the market does not have much going for it with only three trading days left of this fiscal year (ending March 20).

Saderat singlehandedly drew TSE’s main index TEDPIX down by 717.7 points and Parsian also lent a hand to bleed the index for 69.73 points. The two basically accounted for 99% of TEDPIX’s 788.23 point drop for the day.

The two banks’ saga at the equity market is a mirror of their sorry state of financial affairs. Saderat, for instance, has floated only about 6% of its shares on the market and its nominal capital stands at about 57 trillion rials ($1.18 billion).

Saderat’s retained loss forecast for the current fiscal year (March 2017-18) was about 14.18 trillion rials ($295.4 million) earlier this year. However, it nearly quadrupled the forecast right a day before returning to trade to 45.56 trillion ($949.34 million). The bank explained the hike in liabilities to be due to “lack of a proper market for selling assets as expected.”

Parsian is also in the same boat. With a nominal capital of 23.76 trillion rials ($495 million), its original retained earnings forecast of 1.21 trillion rials ($25.03 million) turned into retained losses reaching 471.32 billion rials ($9.81 million). The explanation given to investors published on Codal.ir points to “a highly competitive environment for deposit attraction and hike in money costs contrary to expectations” as the main cause of underperformance.

Before Saderat and Parsian, Bank Mellat and Tejarat Bank–two other heavyweight lenders blocked on July 2016–returned to trading in early 2017 and sent shockwaves through the market.

The list of banks still frozen on TSE includes Bank Pasargad and Tejarat Bank. The latter was barred for the second time on July 2017 and remains closed to date.