Farzin Announced; Eight Iranian Banks Are at Risk of Dissolution

Mohammad Reza Farzin, the Governor of the Central Bank of the Islamic Republic, announced at an economic conference that a reform plan for eight banks will be issued next year and "if they are not reformed, we will move towards dissolution and merger." According to this official, cleaning up the banks' balance sheets is on the agenda, and the dissolution of three credit institutions has been executed with minimal cost and issues. A significant point in Farzin's statements is the number of non-compliant banks and the lack of disclosure of their names. However, the website 'Farday-e Eghtesad' had previously reported on May 6 that although these banks are not directly named, using criteria such as 'capital adequacy ratio' and 'accumulated losses' can somewhat reveal which banks are in poor condition. This analytical economic website stated that according to the latest statistics, 10 banks have negative capital adequacy ratios, among which 'Sarmayeh' and 'Ayandeh' banks are in significantly worse condition than the others. In this report, 'Dey' and 'Iran Zamin' banks were ranked third and fourth. The website 'Farday-e Eghtesad' also mentioned 'Shahr', 'Melli', 'Parsian', and 'Melal' banks as the other four of the eight non-compliant banks at risk of dissolution and merger. The Central Bank, in its first action in this regard in August of this year, transferred 60% of the shares of 'Ayandeh' bank to the Ministry of Economy and announced that the next phase would continue the same program for other banks under similar conditions. The 'Ayandeh' bank is significant in the Iranian economy because its owner, according to published reports, is close to influential political and military circles in the Iranian government and is considered one of the financial tools for this part of the regime. One of the violations of this bank is the granting of loans close to 80% of its capital, with a large portion of these loans going to the 'Iran Mall' project. Iran Mall, built by the Ansari family as the main shareholders of the bank, was introduced as an asset of the bank in a process to compensate for the deficits and losses incurred by the bank due to inflation and the increased value of this vast complex. Ali Ansari, born in January 1962 in Mehrabad, southern Tehran, has frequently appeared in lists of wealthy individuals in Iranian media in recent years. His investments include establishing the Iranian carpet market, the Iranian mobile market, Iran Mall, Ayandeh Bank, and Tat Bank, which have been reported in recent years. Most experts believe that the performance of this bank has had a negative impact on the Iranian economy, but despite all these negative consequences, no power has the ability to confront it. The state-run newspaper Iran also wrote that the 'Ayandeh' bank, with an overdraft of 70 trillion tomans from the Central Bank in 2022, accounted for 25% of the total growth of the monetary base that year. According to the Iran newspaper, Ali Ansari, the major shareholder of this bank, has provided most of the loans of the 'Ayandeh' bank to his own companies. The report emphasized that the 'Ayandeh' bank, by printing money, shifts the financing costs of Ansari's companies onto the people through inflation. The continuation of the consequences of a command economy; an economist: foreign currency resources are plundered and bank debts have tripled. Repeated changes in working hours of offices; an economic expert: governing the country in a 'heads or tails' manner. An economic expert: inflation next year will be above 50%. The Central Bank is looking to eliminate the currency exchange center; exchanges will become part of the 'exchange center'. A report on a silent collapse in the Iranian economy; 19 banks below the standard line.