Corruption, mismanagement in spotlight as Iran dissolves major private bank

"Authorities have merged one of Iran's largest private lenders into the country's biggest state-run bank in a move that highlights a deeply troubled economy and will further squeeze average citizens as pressure from the West grows. The central bank on Thursday announced that Ayandeh Bank, privately owned by one of Iran's wealthiest families, would be dissolved and merged with Bank Melli, the government-run national bank, and that Ayandeh branches across the country would be transformed into Bank Melli branches by Sunday."

"Ayandeh began amid a crisis in the 2010s caused by corruption and lack of regulatory supervision over the ailing banking system, experts told Al Jazeera, at a time when Iran was reeling from United Nations sanctions over its nuclear programme. That was when hundreds of unlicensed financial institutions linked with parastatal, military, or religious foundations mushroomed across the country. They offered exorbitant interest rates to attract cash away from the banks,"

"The government and the central bank finally took over and completed the process of outlawing the unlicensed institutions by 2017, a year after they managed to take control of over 25 percent of the country's entire money supply. The institutions had little in their coffers after being taken over due to loans to insiders and money sunk into property. Much of the skyrocketing debt accrued by the institutions had to be recupe"

Authorities merged Ayandeh Bank into state-run Bank Melli and converted its branches to Bank Melli. Customers were assured that accounts, deposits, and contracts remain unchanged. Ayandeh accumulated large losses and loans to insiders that affected Iran's macroeconomics, prompting central bank intervention and dissolution. The bank emerged during a 2010s banking crisis marked by corruption, weak regulatory oversight, and UN sanctions, when hundreds of unlicensed financial institutions offering exorbitant interest rates attracted deposits and often failed to repay them. The government and central bank took over those institutions by 2017 after they controlled over 25 percent of the money supply, leaving coffers depleted by insider lending and property investments.

Read at www.aljazeera.com