Bankruptcy of Ayandeh Bank affects millions of Iranians

One of Iran’s largest private banks, Ayandeh Bank, has declared bankruptcy. More than 42 million customers are affected by the decision. Their bank assets will be taken over by the state bank Bank Melli, local media report.

Major losses and failed rescue attempt

Ayandeh Bank suffered losses of more than $5 billion and had nearly $3 billion in debt. The bank had 270 branches throughout the country, but could no longer meet its obligations.

The Central Bank of Iran tried to save the institution, but failed. After the rescue attempt failed, the bankruptcy was officially declared on Thursday.

Central Bank promises protection for savers

Central Bank Governor Mohammad Reza Farzin stated that customers would get their savings back. Still, the news causes a lot of uncertainty among account holders, who are afraid they will lose their money.

The incident once again exposes the vulnerability of the Iranian banking system. The Central Bank warned earlier this year that eight more banks could face financial problems if they do not implement reforms.

Confidence in banks worldwide is under pressure

The fall of Ayandeh Bank fits in with a global trend in which confidence in traditional banks is declining. In early 2023, three major regional banks in the United States failed: Silicon Valley Bank, Signature Bank and Silvergate Bank.

Those events led to an increase in interest in Bitcoin and other cryptocurrencies. In a short time, the Bitcoin price rose from less than $20,000 to over $29,000 as savers wanted to protect their money against a possible bank failure.

Iranian economy hit hard by sanctions

The Iranian economy is struggling due to international sanctions. These restrict transactions in US dollars and largely cut the country off from international financial markets. At the same time, the Iranian rial is continuously losing value, reducing the purchasing power of citizens.

The crypto sector in Iran is also facing challenges. In June, the popular crypto exchange Nobitex was hacked, with around $81 million stolen. Since then, cryptocurrency trading in Iran has fallen by about 11 percent.

Increasing risk of financial instability

The bankruptcy of Ayandeh Bank shows how great the pressure has become on the Iranian financial system. Despite reassurances from the authorities, savers’ confidence remains fragile.

The combination of sanctions, inflation and weak bank balance sheets is further increasing economic uncertainty in Iran.