Iran’s Central Bank revoked Ayandeh Bank’s operating license on Thursday, dissolving one of the country’s largest lenders due to massive losses and chronic inefficiency in another sign of gathering economic storm clouds as sanctions bite.
“Despite all the efforts made, this bank could not be placed on the path of reforms as desired by the central bank,” official media cited Central Bank Governor Mohammadreza Farzin as saying.
Farzin said that the bank had 5.5 quadrillion rials ($5.1 billion) in accumulated losses, 3.13 quadrillion rials ($2.9 billion) in overdrafts, and a negative 600 percent capital adequacy ratio.
Iran’s economy minister said all customer deposits will be transferred to state-owned Bank Melli Iran, with branches rebranded and funds accessible from October 25.
“Serious measures for banks that did not comply with regulations were necessary, but in the past, legal shortcomings prevented decisive action,” Ali Madanizadeh said.
Madanizadeh said the accumulated losses of Ayandeh Bank would be covered by the bank’s main shareholders, without providing further details.
The collapse underscores Iran’s deepening banking crisis, worsened by sanctions and mismanagement. Earlier this year, the Central Bank warned that eight other banks risk dissolution without reforms.
The Central Bank of Iran has not publicly disclosed the names of the eight banks at risk of dissolution due to financial instability.
Ayandeh Bank was established in 2013 following the merger of several smaller financial institutions, most notably Tat Bank, Saman Bank’s credit institutions, and Ansar Financial and Credit Institute.
Iran’s banking system has been one of the hardest-hit sectors under decades of United States and international sanctions, which have crippled access to global finance, cut off dollar transactions, and eroded confidence in the rial.
