Page 39 - IRANRptOct20

Bank Melli Iran divests $113mn in non-banking assets
Iranian banks, PSPs find common ground with new payment card commission deal
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.
Government-owned Bank Melli Iran (BMI) divested non-banking assets worth Iranian rial (IRR) 26.13 trillion ($621.5mn at the official rate, $113mn at the free market rate) in the first five months of the 2020/2021 Persian calendar year (mid-March to mid-August), the bank announced in a press release.
BMI increased its overall portfolio of assets over the past 40 years since the Islamic Revolution by taking control of, and investing in, enterprises including a minerals company and residential and commercial properties. Other inherited assets included thousands of branches of BMI across the country which by now have either been consolidated with other branches or shut down.
The value of the divested assets was almost three times higher than the value of those sold by the banking group in the entirety of the previous Persian year, the bank noted.
One of the key assets sold is an 81% stake in minerals company Madan Shekafan Tehran Co. The company was sold by the bank in February.
BMI, however, has not been entirely successful with the divesture of its portfolio, with several assets failing to attract buyers. Sales fell flat for several reasons including a lack of buyers and weak demand domestically.
Overall, banks and financial institutions in the country are said to hold above IRR1 quadrillion in assets, which the domestic economy is struggling to reabsorb.
BMI is one of several state-owned enterprises as well as ministries that were instructed to offload assets as part of liquidation efforts after several years of failed investments in projects and companies.
Iranian banks have welcomed a proposal from Iran’s Fintech Association over a change in fees on card payments from banks to payment service providers (PSPs), various media outlets in Iran have reported.
The proposal would change a situation in which the banks are lumped with the transaction costs. A previous attempt to levy the costs on end-users and shopkeepers in 2015 fell flat. Some shopkeepers threatened in protest to withdraw their acceptance of card machines.
The proposal was put forward by a group of fintech companies that have benefitted from the payment process in recent years, partly because of growth in online payments.
The proposal to boost the competitiveness of the market comes with the banks haemorrhaging costs in recent years on point-of-sale (POS) devices and on both payment receipts and transfers.
The proposal would see the PSPs taking on a share of the bank transfer costs and network fees. As things stand, the price is around IRR500 per transaction.
39​ IRAN Country Report October 2020 www.intellinews.com