Iran’s Central Bank revoked Ayandeh Bank’s operating license on Thursday, dissolving one of the country’s largest lenders due to massive losses and chronic inefficiency in another sign of gathering economic storm clouds as sanctions bite.
“Despite all the efforts made, this bank could not be placed on the path of reforms as desired by the central bank,” official media cited Central Bank Governor Mohammadreza Farzin as saying.
Farzin said that the bank had 5.5 quadrillion rials ($5.1 billion) in accumulated losses, 3.13 quadrillion rials ($2.9 billion) in overdrafts, and a negative 600 percent capital adequacy ratio.
Iran’s economy minister said all customer deposits will be transferred to state-owned Bank Melli Iran, with branches rebranded and funds accessible from October 25.
“Serious measures for banks that did not comply with regulations were necessary, but in the past, legal shortcomings prevented decisive action,” Ali Madanizadeh said.
Madanizadeh said the accumulated losses of Ayandeh Bank would be covered by the bank’s main shareholders, without providing further details.
The collapse underscores Iran’s deepening banking crisis, worsened by sanctions and mismanagement. Earlier this year, the Central Bank warned that eight other banks risk dissolution without reforms.
The Central Bank of Iran has not publicly disclosed the names of the eight banks at risk of dissolution due to financial instability.
Ayandeh Bank was established in 2013 following the merger of several smaller financial institutions, most notably Tat Bank, Saman Bank’s credit institutions, and Ansar Financial and Credit Institute.
Iran’s banking system has been one of the hardest-hit sectors under decades of United States and international sanctions, which have crippled access to global finance, cut off dollar transactions, and eroded confidence in the rial.
“Iran welcomes the expansion of defense and industrial cooperation with friendly and independent countries, and Belarus holds a special place in this partnership,” Defense Minister Aziz Nasirzadeh told Belarus’s chairman of the State Authority for Military-Industrial Cooperation in a visit to Tehran, according to state media.
Iran and Belarus have both turned to Russia for economic and defense support amid harsh sanctions imposed by the United States and Europe, but advanced air defense systems provided by Moscow were likely destroyed in Israeli attacks last year.
Tehran has supplied Moscow with drones and ammunition for its invasion of Ukraine, while Minsk has hosted Russian troops and allowed its territory to be used as a launchpad for attacks.
Both governments see closer coordination with Russia as a counterweight to Western pressure.
Minsk and Moscow have been joined in a supranational Union State since 1999.
US sanctions on Belarus include prohibitions on transactions with key government entities such as the Ministry of Finance of the Republic of Belarus and the Development Bank of the Republic of Belarus, as well as restrictions on exports and re-exports.
Facing sanctions
Iran remains under broad US sanctions targeting its energy, financial and military sectors over its nuclear activities and arms transfers to Russia.
Following a 12-day war with Israel in June and the return of UN sanctions last month, Iran is seeking to rebuild its economy and strengthen its military readiness.
Western countries have called for Tehran to engage in renewed diplomacy with Washington and restored access to international nuclear inspectors.
Russian Foreign Minister Sergey Lavrov said last week that Russia would help Iran meet its military needs even after European-triggered international sanctions further restricted trade with Tehran.
Iran denies seeking nuclear weapons, decried the attacks in June as illegal and say US demands that Tehran rein in its defense capabilities are unacceptable.
Speaking during a visit to West Azarbaijan province, Pezeshkian acknowledged that raising fuel prices is unavoidable to address Iran’s worsening energy shortages but cautioned that any decision would require “careful planning” to avoid deepening economic hardship.
“There is no question that gasoline must become more expensive,” he said, according to state media. “But it is not a simple decision. We cannot act overnight or create more difficulties for people.”
His comments came amid intensifying debate over Tehran’s plans to introduce a new pricing system aimed at curbing soaring fuel consumption and smuggling.
Over the past two weeks, Iranian media have reported that the government is reviewing several reform scenarios, including multiple pricing tiers and possible changes to fuel quotas.
Last week, Khaneh Eghtesad published what it said was a leaked cabinet decree outlining a roadmap for “gradual correction” of gasoline prices. The government initially denied the report but later confirmed that the issue was under study by cabinet working groups.
Cabinet secretary Kamal Taghavi-Nejad said this week that fuel reform had been discussed but “no final decision” had been taken. A lawmaker, Amirhossein Sabeti, said the debate over introducing three fuel price tiers had become serious in parliament.
Energy officials say domestic gasoline consumption has surged well beyond refining capacity, forcing costly imports and draining subsidies that analysts estimate at more than $30 billion annually.
Pezeshkian has pledged to overhaul Iran’s energy subsidy system, arguing that maintaining the current artificially low prices is unsustainable. “Even water costs more than gasoline in Iran,” he said earlier this week.
The last major fuel price hike in November 2019 sparked nationwide protests that were met with a violent crackdown. Rights groups and Reuters reported that at least 1,500 people were killed.
Officials have since stressed that any future reform would be gradual and paired with compensation measures for low-income households. The administration insists it will not repeat the sudden price shock of 2019.
Economists warn that aligning prices with real production costs could sharply raise inflation but may also help reduce smuggling and waste. The government is expected to unveil its energy reform framework before submitting next year’s budget in December.