Major Bank Debtors List: MIDCO Tops with 134 Hemmat in Non-Performing Loans

According to Central Bank data, the total net non-performing loans of the 20 largest beneficiaries across 20 banks and credit institutions have reached approximately 394 thousand billion tomans, of which more than 134 thousand billion tomans is attributed to MIDCO.

Ambassador Arjan-Economic Group: In a situation where the supply of working capital has become one of the most important problems of the country's production units, and many small and medium-sized enterprises are facing serious restrictions to receive bank facilities, the analysis of the statistics of non-current bank facilities indicates a significant concentration of non-current claims in some large economic groups.

According to the information provided by the central bank statistics about large non-current facilities, the net sum of non-current facilities of the largest beneficiaries introduced in 20 banks and credit institutions reaches about 394 thousand billion tomans.

It is worth noting that of this figure, more than 222 thousand billion tomans are allocated to only two single beneficiaries in Pasargad and Ekhetaz Novin banks; An issue that doubles the necessity of examining the repayment status of large facilities, the concentration of credit risk and the way of monitoring the large customers of the banking network.

Pasargad Bank in Sadr; 134 Midco non-current facilities

The review of non-current facilities data shows that Middle East Mines and Mineral Industries Development Company (MIDCO) is at the top of the list by registering about 134.2 net non-current facilities with Pasargad Bank, this figure alone is equivalent to about 34% of the total non-current facilities of 20 beneficiaries.

Midco is considered one of the largest groups active in the country's mining and mineral industries and has numerous projects in the chain of steel, copper and other mining industries, however, the magnitude of a company's economic activity cannot alone answer questions about the repayment status of its bank facilities.

The number 134 of Midco's non-current facilities raises this question; How much of these claims are overdue, delayed or doubtful, and what is Pasargad Bank's plan to collect or determine their obligations?

The issue becomes more important when Midco's historical connection with Pasargad financial complex is also taken into consideration. Considering the history of shareholder relations between Midco and the companies affiliated to the Pasargad group, one of the issues that needs clarification is the status of this company from the perspective of regulations related to related parties of banks. If Midco is included among the related parties of Pasargad Bank based on the Central Bank's rules, the review of how to comply with the credit limits, guarantees and regulations related to these persons will be doubly important.

Of course, the definitive diagnosis of the status of related parties requires an examination of the ownership and control structure of the company during the reporting period and official information of the supervisory body.

investment goals; 88.5 percent of non-current facilities in New Economy Bank

After Midco, the name of the goals investment company can be seen in Ekhtaz Novin Bank. According to the information provided, the net non-current facilities of this company have reached about 88.5 hemats, in this way, the total non-current facilities registered for Midco in Pasargad Bank and the investment goals in Ekhtaz Novin Bank amount to 222.7 hemats.

These two companies alone account for more than half of the total sums of the reviewed list, such concentration shows the importance of credit risk management in banks; Because the repayment status of several large customers can have a significant effect on the quality of assets, profitability and ability of the bank to provide facilities.

Table of the biggest beneficiaries of non-current facilities of 20 banks

Reviewing the information provided by Central Bank statistics shows that the biggest beneficiaries introduced in the list of non-current macro facilities of banks are as follows:

Five big beneficiaries have 304 non-current facilities

One of the most important points of this statistic is the significant concentration of non-current facilities in a limited number of customers. The first five beneficiaries of this list, including Midco, Target Investments, Persian Gulf Petrochemical Industries, Golghar Mining and Industrial and Azam Group, have a total of 303.8 hemat of non-current facilities.

This figure is equivalent to about 77% of the total amounts recorded in the table, in other words, the major part of the non-current facilities in this list is available to only five economic groups, this situation shows that the examination of the non-current claims of the banking network should not be focused only on the number of debtors; Moreover, the concentration of claims in large customers and its possible effect on the balance sheet of banks should also be taken into consideration.

The presence of large industrial companies in the list of non-current facilities

Another point is the presence of the names of some large industrial and mining companies and groups in this list. Persian Gulf Petrochemical Industries Company is registered with Saderat Development Bank with 30.8 shares and in Refah Kargaran Bank with 2.1 shares of non-current facilities.

In this way, the total amount registered for this title in two banks reaches 32.9 hemats, also Golgohar Mining and Industrial Company with 29.17 hemats in Tejarat Bank, Azam Group with 21.1 hemats in Maskan Bank and Mapna Group with 19.3 hemats in Parsian Bank are other leading names in this list.

According to banking regulations, non-current facilities can be placed in different classes and the legal and credit status of each case is different, however, the publication of such figures increases the need to provide detailed explanations about the reasons for non-current facilities, the status of collaterals and the debt collection plan.

When bank resources are caught in non-current claims

In Iran's bank-oriented economy, an important part of the financing of production activities is done through the facilities of the banking network, in such a structure, the increase in non-current claims can affect the capacity of banks to grant new facilities. A bank that has registered a significant part of its resources in the form of non-current claims may face more restrictions in financing new customers; However, the severity of this effect depends on the state of liquidity, capital, receivables reserves and other financial indicators of the bank.

This issue becomes more important when many production units in the country, especially small and medium enterprises, are facing serious problems in securing working capital. In such a situation, the important question is; Is the banking system as strict in allocating and monitoring large facilities as it is in paying new facilities to small companies, and is it sensitive in following up the demands of large customers? The answer to this question requires the publication of more detailed information about the banks' credit performance.

The central bank should clarify about the non-current facilities of related parties

One of the important issues in the investigation of large non-current facilities is the status of persons related to banks. Based on the logic of precautionary regulations, granting facilities to related parties requires special rules and supervision due to the possibility of conflicts of interests.

In the reviewed list, the names of some companies and groups can be seen whose ownership and management relationships with the relevant bank can be important, for example, the situation of Midco in Pasargad Bank and the Economic Development Group of Nations in the Credit Institution of Nations, from the point of view of the ownership structure and regulations of related parties, are issues that can be investigated.

In the meantime, Pasargad Bank, registering 134.2 hemats of non-current facilities for Midco, more than other banks in this list, needs to provide an explanation on how to manage and collect the claims of its biggest customer. Clarifying the status of related parties, the amount of non-current facilities, collaterals and measures taken to collect claims can help strengthen public trust in the banking system.

Banking resources should return to the production financing cycle

Publishing the statistics of non-current large facilities is an important step towards the transparency of the banking network; But transparency leads to the improvement of the performance of the banking system when the published information is the basis for evaluating, monitoring and modifying credit procedures. Examining the presented figures shows that only 20 beneficiaries introduced in different banks have about 394 net non-current facilities; A number that reveals the importance of following up on large claims and credit concentration management.

In a situation where producers are faced with limited resources to provide working capital, determining the assignment of large non-current claims is not just an accounting issue in the banks' balance sheets; Rather, it is an issue related to the efficiency of the financing system and the access of the productive sector of the economy to credit sources.

Now, by publishing more details and monitoring the process of debt collection, the central bank is expected to determine what measures have been taken to reduce risk concentration and return banking resources to the financing cycle of the economy.