The Central Bank of Iran (CBI) said that the entities being consolidated include Ansar Bank, Ghavamin Bank as well as Hekmat Iranian Bank, Mehr Eqtesad and Kowsar financial credit institution.
Sunday 03, March 2019
(Bloomberg) --Iran will merge five lenders into state-run Bank Sepah.
In a statement, the central bank stated that Bank Sepah is one of the reputable government lenders and the merger is an important step with a view to maintaining stability as well as the health of the banking system.
Iran’s banks came under pressure before the nation signed the 2015 nuclear agreement with world powers that lifted international sanctions. To attract customers and deposits, some banks have been offering interest rates exceeding 20 per cent.
Iran’s economy and currency have been hit since the US withdrew from the nuclear accord, known as the JCPOA, almost a year ago and the re-imposed economic sanctions.
The Iranian rial lost almost 70 per cent of its value in the unregulated market last year, prompting a crackdown on currency manipulators.
The merger of banks “is a positive development that reflects the serious debate taking place in Iran about the perils of mixing money and politics,” said Esfandyar Batmanghelidj, founder of Bourse & Bazaar, a news website which tracks developments in Iran’s economy.
“By consolidating these banks, it becomes easier for the Central Bank to enforce regulations on investment activities and financial transparency,” added Batmanghelidj.
Iran’s economy also has been impaired by “deficient” anti-money laundering rules and counter terrorism financing infrastructure, according to IHS Markit, as well as by the “widespread and opaque influence” of commercial and banking entities tied to the Iranian Revolutionary Guard Corporation.