Bank Merger Okayed

(Tuesday, March 12, 2019) 09:58

The Securities and Exchange High Council, the highest capital market decision-making body, has issued the permit for selling the shares of five soon-to-be-merged banks in the after-hours trading, the chief of Securities and Exchange Organization said.

According to Shapoor Mohammadi, the shares are to be sold at the maximum nominal price or at prices quoted at the time their symbols were frozen - whichever is higher- emphasizing that the SEO endeavors to protect the rights of shareholders. 


Shareholders can either sell their shares to other entities or await reports from judicial assessors on the loss or profit accounts of the merging banks, he said. 


“[Based on the assessment report], the assessor decides on the fate of merged lenders’ shares and the rights of shareholders,” IRIB News Agency quoted him as saying. 


A special judicial branch will be appointed by the judiciary to deal with complaints in this regard. 


Central Bank of Iran announced last week a decision to merge five banks and credit institutions affiliated to armed forces with the state-owned Bank Sepah. The merger is seen as part of a broader government scheme to reform the ailing banking system.


Governor of Central Bank of Iran Abdolnaser Hemmati said earlier last week that the merging process would take at least four months, allowing enough time for the lenders to hold shareholders’ meetings. 




The SEO chief says it is possible for lenders to sell their excess properties via Iran Mercantile Exchange if there is homogeneity in the makeup of the offered goods and if the approval of IME's vetting body is obtained




He said in coordination with the SEO, the symbol ticker of the merging banks will re-open in the stock market in a month and allow the merging body (Bank Sepah) purchase the shares of shareholders. 




Lenders’ Surplus Assets 

The SEO chief says it is possible for lenders to sell their excess properties via Iran Mercantile Exchange if there is homogeneity in the makeup of the offered goods and if the approval of IME's vetting body is obtained. 


Mohammadi pointed to futures contracts (also known as futures), put option, call option, and Saffron Options Contracts on the IME as a new financial instrument that unveiled in the current fiscal. 


Launching new instruments are seen as part of SEO’s plans to diversify and expand financing methods in the capital market. IME launched contracts for saffron last week to help improve trade in agricultural products. 


Options are a type of derivative security. An option is a derivative because its price is intrinsically linked to the price of something else. If one buys an options contract, it grants the right, but not the obligation, to buy or sell an underlying asset at a set price on or before a certain date. 


A call option gives the holder the right to buy stock, and a put option gives the holder the right to sell stock.


Asked about launching the warrant and short-selling instruments, Mohammadi said the new instrument will be launched in the first quarter of the new Iranian fiscal that starts on March 21. 


“The Jurisprudence Committee of SEO has already given the go-ahead for the warrant. As for short selling, the SEO is doing the finishing touches to put it into operation soon”, he was quoted as saying by Security and Exchange News Agency.  


IME boss Hamed Soltaninejad said on Monday that international trading of saffron on the mercantile exchange will start next fiscal in foreign currencies in one of the free trade zones.