Page 39 - IRANRptNov20
P. 39
State banks in Iran continue to cut costs by selling off branches surplus to requirements
at a meagre $5mn, it added.
State-owned Iranian banks are continuing with cost-cutting strategies that hinge on shutting down high street banks viewed as surplus to requirements, according to an economy minstry report cited by Donya-e Eqtesad.
Bank Melli Iran (MBI), Bank Mellat, Bank Sepah (sometimes wrongly associated with the Islamic Revolutionary Guard Corps, or IRGC) and Bank Tejarat (Trade Bank) are among those closing branches.
The state lenders have reportedly sold off branch assets for IRR280tn ($1.2bn at the free market exchange rate, but $6.7bn at the official rate) since January 2018 to private developers. The buildings are typically turned into restaurants or are torn down to make way for apartment complexes.
In the period stretching from the start of President Hassan Rouhani's first term in 2013 to the end of 2017, the state banks sold IRR135tn of commercial real estate assets, the report noted.
Successive governments in Iran have mounted increasing pressure over the years to force banks to divest all non-core assets, including companies that have come under their control following bankruptcies, impaired loans and bad debts.
Earlier in August, MBI announced it had divested non-core assets (commercial real estate and other assets) valued at IRR17.4tn ($102) in the previous Persian year (ended March 19).
Last November, MBI failed to find a buyer for the National Development Investment Company, which it listed as having a value of €1.4bn. The business appears to have a level of debt that makes it unattractive to buyers. Other failed sales concern some retail bank branches in Tehran and elsewhere. MBI and other banks have attempted to dispose of them, but due to the ongoing inflationary effects of the severe devaluation of the Iranian rial, they have struggled to find buyers.
8.2 Central Bank policy
Iran’s central bank chief introduces “100 toman” note
Central Bank of Iran (CBI) governor Abdol Nasser Hemmati has showcased a new “Iran Cheque” banknote with the last four zeros greyed out, IRIB reported.
Iran is transitioning away from the exhausted Iranian rial (IRR) which has lost its value several times over since the 1979 Islamic Revolution. The introduction of the banknote comes as part of the wider Monetary and Reform Banking Law. It aims to remove four zeros from the currency and officially rename it the “toman” within the next few months.
Colloquially in the Islamic Republic, the toman represents 10 times the value of the rial and it is the de facto currency used in daily transactions. For instance, IRR10,000 is known informally as Iranian toman (IRT) 1,000 and prices, for instance, are typically stated in that way online.
The “Iran Cheque” is for IRR1,000,000 (around $5), but with four zeros faded out it appears as “100”.
Iran's SNN reported that the CBI was also reissuing the IRR500,000 note, with a "50" in the top left.
As part of the switch to the toman, there will be a transition period of three years during which both currencies (rials and tomans) will be simultaneously valid.
39 IRAN Country Report November 2020 www.intellinews.com
