Recapitalisation to become more difficult for #Iran's banks as US sanctions bite - The National

Recapitalisation to become more difficult for Iran's banks as US sanctions bite - The National:

There is little hope of progress regarding Iran's ability to recapitalise and restructure its battered banking sector as bad loans continue to mount in the wake of tightening US sanctions that take their toll on the economy.

“Many Iranian banks are in need of recapitalisation and restructuring, having accumulated high levels of non-performing loans,” Fitch Solutions, a unit of Fitch Group said on Tuesday in its latest report on the country's banking sector. “We see little scope for meaningful progress.”

Although an outright collapse of the Iran’s financial sector is unlikely in the near term, consolidation is eventually needed in the sector, according to the survey. The weakness in the sector is largely the result of years of interference with lending practices by government and government-linked entities, coupled with a weak regulatory environment, the report said. During the previous sanctions that preceded the 2015 nuclear agreement known as the Joint Comprehensive Plan of Action, Iranian banks offered interest rates as high as 30 per cent on deposits.