Iran’s Sarmayeh Bank, Two Financial Institutions On Verge of Dissolution
Despite central bank denials, Iranian Sarmayeh (Capital) Bank and two financial institutions, Nour and Caspian, are reportedly on the brink of dissolution.
Despite central bank denials, Iranian Sarmayeh (Capital) Bank and two financial institutions, Nour and Caspian, are reportedly on the brink of dissolution.
Sarmayeh Bank, affiliated with the Teachers' Saving Fund, reported a net loss of over $160 million in the 12-month period ending in March. The cumulative loss of the bank totals over $960 million.
The bank has been embroiled in numerous corruption cases in recent years, involving 400 suspects, some of whom were family members of political officials in the Islamic Republic at various times.
Government interventions, excessive borrowing, and a lack of transparency and accountability in the banking sector are cited as other significant factors contributing to the bankruptcies.
The reports about the liquidation of the struggling banks have been circulating for a while. In August, the central bank officially warned of the risk of bankruptcy for Sarmayeh Bank, stating, "If the bank's board of directors and shareholders fail to take measures to increase the capital adequacy ratio, the bank will be subject to special penalties and restrictions, and it must present a clear plan to address its chronic imbalance."
However, similar to many other decisions in Iran, the liquidation never materialized, possibly to prevent causing widespread panic among the already distrustful population regarding the country's banking system.
Previously, Ayandeh (Future) Bank had been mentioned as one of the banks under consideration by the central bank for either dissolution or merger, which faced objections from central bank authorities.
