Iran State Banks Shed $3.2b of Excess Assets in 5 Years

EghtesadOnline: Iran's state-owned banks have sold excess assets worth 135 trillion rials ($3.21 billion), which included real estate, company shares and other resources, from the beginning of President Hassan Rouhani's first tenure in 2013 until now, the minister of economic affairs and finance said.

News ID: ۷۸۲۴۲۹

28 April 2018

Masoud Karbasian divulged the figure early Tuesday in the latest open session of parliament where he and other high-level officials presented a report on the asset divestment scheme, reported ICANA, the official news outlet of the parliament.

The scheme is being implemented to relieve banks of excess assets, return to their original mandate of eliminating non-banking activities and redirect frozen funds toward local production.

According to Karbasian, 99 trillion rials ($2.35 billion) of the state-run banks' assets were sold by the end of Rouhani's first tenure in early August while the rest have been divested since, Financial Tribune reported.

The minister also set an ambitious goal and said the number is hoped to reach 300 trillion rials ($7.14 billion) in the coming months.

"We wish to use this money to increase the capital of banks, which will be an effective move in line with increasing the liquidity and enhancing the health of banking system," he said.

Karbasian noted that the Export Development Bank of Iran has had no excess assets and the Iran-Venezuela Bi-National Bank is being eyed for a major overhaul that will materialize with the help of the Foreign Ministry.

In early February, the EDBI chief executive had announced that Iran's only bi-national bank is to be repurposed.

“In light of our high trade deals with Latin American countries, we are negotiating with them, especially with Brazil, to turn the Iran-Venezuela Bi-National Bank into an Iran-Latin America bank,” Ali Salehabadi added.

In case of private lenders, Karbasian told MPs on Tuesday that since his ministry has less leeway, it had to act through the tax system instead of the Securities and Exchange Organization and the Privatization Organization that assisted it concerning state-run banks.

"At present, the volume of tax declarations issued in the previous year stands above 90 trillion rials ($2.14 billion) because it is estimated that excess assets of the banks must have been sold and they had to pay tax for it," he said.

Early December, Karbasian had put the total volume of property excess assets shed by all banks during the last fiscal year at 150 trillion rials ($3.57 billion).

Also addressing MPs on Tuesday was Akbar Komijani, Central Bank of Iran's vice governor, who blamed banks not providing transparent information as the reason behind the fact that the government has failed to achieve its target of selling 33% of banks' excess assets each year.

According to Komijani, only three banks from a total of 36 banks and credit institutions came up with justifiable reasons for not providing information about their excess assets and failing to register them in the official online system set up for this purpose.

Fifteen banks provided their info with the approval of independent auditors while 18 did so without approval, meaning that their data were considered unacceptable by CBI.

The CBI official said the central regulator is in talks with lenders to rectify the situation.

Komijani then announced his own figures and put the "estimated and self-declared book value" of banks' excess assets during the fiscal 2016-17 at 251 trillion rials ($5.97 billion), whereas 80 trillion rials ($1.91 billion) and 28 trillion rials ($666 million) of those assets were sold during the aforementioned year and the first nine months of last year, indicating that 44% of the assets were sold.

"Non-bank shares of banks and credit institutions at the end of the fiscal 2016-17 were valued at 292 trillion rials ($6.95 billion) and the finished value of shares sold in that year was equal to 49 trillion rials ($1.16 billion). Additional shares worth 42 trillion rials ($1 billion) were sold last year," he added.

The Economy Ministry on Monday published the first report drafted by a specialized committee set up to monitor the sales of banks' excess assets.

According to the report, more than 33.69 trillion rials ($802 million) worth of excess assets were sold during the final three months of the previous fiscal year to March 20, whereas about 100 trillion rials ($2.38 billion) were sold in the 33 months before that.

As Karbasian had said last October that banks must stop their non-banking activities by June 21 and as he vowed again on Tuesday to boost such efforts, the next few months must prove a turning point for shedding banks' excess assets. But success by the set deadline is unlikely, as the government must accomplish in a few months more than double what it did in about five years.