Tehran Stock Market Will Help Liquidate Surplus Assets of Banks

EghtesadOnline: The government is piling pressure on banks to put an end to their non-bank businesses by getting rid of surplus assets. The push appears to gain momentum in recent weeks as the Ministry of Economy and Finance last weekend unveiled an online auction system for this purpose.

News ID: ۷۸۵۰۹۴

04 December 2019

Now the CEO of Securities and Exchange Organization says the stock market has created mechanisms that facilitate the divestiture process of banks’ unwanted assets.

“The common procedures in the stock market say products should be offered homogeneously, which could change hands in multiple deals. But the Iran Mercantile Exchange has made it possible for banks’ properties to be sold in a single deal,” IRNA quoted Shapour Mohammadi as saying.

According to the CEO, the IME designed a platform in 2011 for offering single-product items, Financial Tribune reported.

IME has precise instructions for hosting banks’ assets, Mohammadi said. “Investors in this market are assured that they trade in a transparent and trustworthy market and banks will be able to unlock their resources in a competitive manner”.

Abbas Memarnejad, the deputy economy minister for banking, insurance and state-owned companies' affairs, referred to negotiations with IME based on which lenders would be able to put up their assets on an electronic auction by the last of December.

Economy Minister Farhad Dejpasand unveiled an online system on Sunday that tracks surplus assets owned by banks and credit institutions.

According to Dejpasand, the system offers data on lenders’ surplus property worth 170 trillion rials ($1.3 billion). This doesn’t cover the excess assets of all banks, which are estimated to be in the region of 1,000 trillion rials ($8 billion).

The government has plans to divest 400 trillion rials ($3.2 billion) before the current fiscal is out next March.

The mechanism, dubbed ‘Fam’ is available at www.sam-ba.ir and www.fam-bank.ir. It allows potential buyers convenient access to data about banks’ extra assets and facilitates sales using online auction.

Fam functions as a venue through which lenders put their properties on sale and potential buyers come forward.

More specifically, the system logs data on 18 banks, both private and state-owned, with the aim to improve transparency about the value of assets and inform public opinion about the details.

The assets on sale include 1,246 manufacturing units and 277 animal husbandry companies. The minister emphasized that “earnings in the entirety from the divestiture will go to banks and not a penny to the treasury”.

Four banks, namely Bank Melli Iran, Mellat Bank, Agricultural Bank of Iran and Bank Saderat Iran, own 50% of the assets with the state-owned BMI topping the list with 14% of the total.