Bank Melli's Investment Arm Continues Downsizing Efforts

EghtesadOnline: Bank Melli Iran's investment arm, Tosee Melli Group Investment Company, is planning to continue its downsizing efforts, which started last year, by selling stakes in six of its assets in the new fiscal year (started March 21), TGMIC's investment manager, Abbas Naeemi, announced.

News ID: ۷۸۲۳۰۱

10 April 2018

The sales include a 15.48% stake in Pars Carbon Black Company, 46.96% in the troubled home appliance manufacturer Arj Corporation, 33.86% in Iran Transfo, 33.33% in Barez Industrial Group, plus unspecified stakes in Shafa Darou and Tosee Melli investment companies.

Five of the proposed sales, except for Shafa Darou, were first offered last year but failed to attract any buyers.

Shafa Darou's sale can be more attractive for investors compared to other offerings, as the firm's recent initial public offering was warmly received in the market, Financial Tribune reported.

Iranian banks have been mandated by articles 16 and 17 of the Law on Removal of Obstacles to Competitive Production and Boosting the Country's Financial System to privatize at least 33% of their surplus assets annually to abandon what lawmakers consider "non-banking activities".

"Bank Melli is determined to observe the law and give up on business ownership by shedding all assets deemed surplus," Naeemi said.

The government is urging Iranian banks to focus primarily on financing the production sector. That can be realized by cleaning up the bank’s surplus assets, most of which are either toxic or underperforming.

However, very few of the banks that embarked on the path have succeeded. BMI, alongside the Bank of Industry and Mine were the only two, even though others such as Saderat tried their hand.

BMI sold a 67% stake in National Industries and Mining Development Company through TGMIC on March 13. The deal totaled 12.4 trillion rials ($248.19 million) and was sold to Khouzestan Steel Faragir Trade Development Company, a subsidiary of Iran's largest steel exporter Khouzestan Steel Company via auction.

Bank of Industry and Mine also sold a 51% share in its investment arm, Industry and Mine Investment Company, in February. Over 2.29 billion shares in the company with a base price of 1,900 rials per share were offered on Tehran Stock Exchange in a block sale.

Bank Melli had similar plans, too, as it listed its 70.68% share in TGMIC for sale on TSE on March 18. Yet "no buyer with an acceptable and serious offer emerged", said Naeemi.

The official did not mention whether BMI will reoffer the stake.

Bank Melli is the first national Iranian bank established in 1927 on the order of the Iranian Parliament and since then, it has consistently been one of the most influential Iranian banks.

In 1931, the bank was authorized to print and distribute the Iranian currency rial. BMI acted as the central bank until CBI was established in 1960, after which all of its central banking responsibilities were transferred to the new entity.

Since 1933, BMI has grown into a large retail bank with several domestic and international branches. It opened its first foreign branch in Hamburg, Germany, in 1965.

Bank Melli Iran is owned and operated by the government of Iran.