Military Banks and Credit Institutions to Merge into Bank Sepah

On Saturday, the Central Bank of Iran announced in a statement that a plan has been developed to merge banks and credit institutions affiliated with the armed forces into Bank Sepah. The banks Ansar, Qavamin, Hikmat Iranians, Mehr Eghtesad, and the Kowsar credit institution will be merged into Bank Sepah. According to the Central Bank's announcement, this decision was made based on the resolutions of the Monetary and Credit Council and the Supreme Economic Coordination Council of the three branches of government, aiming to "reform the banking system and organize the money market." The Central Bank stated that after the merger, banking services to all customers of these banks and credit institutions will continue under the management and guidance of Bank Sepah as per the previous routine. In another section of the announcement, the Central Bank of Iran clarified that the Securities and Exchange Organization has prepared a structured framework for this merger and comprehensive expert assessments, as well as determining the status of shareholders, to ensure the rights of shareholders are "settled and fulfilled." The Central Bank also assured that all employees working in the banks and credit institutions involved in this process will continue their activities as before, and their salaries and benefits will remain in accordance with previous contracts. Previously, in the winter of 2017, Farshad Heydari, the then Deputy Supervisor of the Central Bank of Iran, had stated: "With the merger of the Thamen Institute, Mehr Eghtesad Bank, and Ansar Bank, a new bank named 'Ansar' would likely be established in the coming days [spring 2018]." According to Farshad Heydari, in the second phase, the Kowsar credit institution and the banks Qavamin and Hikmat Iranians were to merge, resulting in the creation of two new banks from the merger of these banks and institutions. However, this plan changed, and it was decided that all these banks and credit institutions affiliated with the armed forces would continue their activities within the framework of Bank Sepah, which is referred to as the first Iranian bank. Brigadier General Amir Hatami, the Minister of Defense and Armed Forces Support of Iran, first announced in the summer of 2017 the transfer of several companies affiliated with the armed forces. According to Amir Hatami, these transfers and mergers were put on the agenda after the Supreme Leader of the Islamic Republic tasked the General Staff of the Armed Forces of Iran to pursue the transfer of "unrelated" economic enterprises within the Islamic Revolutionary Guard Corps, the Army, and the Ministry of Defense. Following that order, the coordination between Brigadier General Hatami, the Minister of Defense, and Valiollah Seif, the then Governor of the Central Bank of Iran, facilitated these mergers. It is said that some of these institutions and banks affiliated with the military and law enforcement have accumulated losses. The 'Ansar' bank and 'Thamen' institute belong to the Islamic Revolutionary Guard Corps and the Cooperative Foundation of this military institution. The 'Mehr Eghtesad Iran' bank initially started its operations in 1993 under the name 'Basyj Fund' and was supposed to provide banking services to members of this fund, but later the scope of services of this fund expanded. The 'Qavamin' bank is also a result of the interest of Mohammad Baqer Qalibaf, the then commander of the Iranian police force, in banking in 2000. Meanwhile, the Ministry of Defense established the 'Kowsar' financial and credit institution in 2008 to increase the number of banks and financial institutions owned by military entities. The Hikmat Iranians bank is also considered a bank belonging to the Islamic Republic of Iran's Army.