Iran Economy News Banking Crisis in Iran Getting Worse

Banking Crisis in Iran Getting Worse

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Iran Focus

London, 10 Apr – New data revealed by Iran’s largest banks shows that a banking crisis is happening in the country, with big-name financial institutions experiencing horrific losses and being unable to even pay the interest on deposits.

So far, the banks on the Tehran Stock Exchange have reported operating losses of $4.5 billion; a figure that has only gotten worse in previous years and looks set to continue for the years to come.

This crisis was revealed by all of Iran’s ten biggest banks — Tejarat, Saderat, Mellat, Parsian, Sarmayeh, Eghtesad-e Novin, Gardeshgari, Dey, Ghavamin and Iran Zamin — but it’s especially prevalent for Mellat and Saderat banks.

Iran’s Central Bank has been advising that banks mitigate their losses by selling off assets, but, as Bank Mellat made clear in a statement, there is no market to buy such assets.

What are the losses?

• Tejarat: $1.5 billion

• Saderat: $1.5 billion

• Mellat: $38 million

• Parsian: $92 million

• Eghtesad-e Novin: $151 million

• Iran Zamin: $78 million

• Sarmayeh: $182 million, as of March 2016

• Dey: $370 million, as of March 2017

• Gardeshgari: $23 million

• Ghavamin: $2 million

• Bank Pasargad: No transparent financial statements in three years

What does this mean for the Iranian people?

Basically, the shareholders and the investors will be paying the price for the banking crises. Shareholders will see their shares plummet in value, while those who have deposited money will receive no interest payments and may experience difficulty getting their money back.

We have already witnessed many protests by the Iranian people against corrupt financial institutions that take money from the poor and then use it to line the pockets of officials who control the banks.

This crisis indicates that there are many more financial protests on the horizon.

What is Iranian government doing?

The Central Bank made moves to improve the transparency of the financial sector since 2016, but that has only shown that the situation is worse than they knew, with many banks operating at a loss or seeing profits fall substantially.

However, Government has failed to tackle the internal corruption that has led to this crisis and includes many of their compatriots. Simply, while the current system is in power this situation will only get worse.

The only way to improve the financial situation for the millions of Iranians is to ensure regime change by and for the people of Iran. That’s why the rest of the world should impose sanctions on Iran, to bankrupt the mullahs and make it easier for people to rise up against them.

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