One of Iran’s largest private banks, Ayandeh Bank, has fallen into bankruptcy, resulting in the assets of more than 42 million customers being absorbed by the Iranian state-owned lender, Bank Melli.
Ayandeh Bank declared bankruptcy on Thursday after accumulating $5.1 billion in losses and nearly $3 billion in debt, according to local media outlet Iran International’s report on Friday. The bankruptcy declaration came just days after the Central Bank of Iran (CBI) failed to rescue the bank, leaving officials with no choice but to close its operations. Ayandeh Bank had operated 270 branches nationwide.
More than 42 million customers have been affected by this move, Iran News Update reported. While CBI Governor Mohammad Reza Farzin assured Ayandeh customers that they will be able to recover their savings immediately, this incident highlights the inherent risks involved in trusting banks that lend out customer deposits, operate with fractional reserves, and seek bailouts when things go wrong.
Failures in the banking system have been a long-standing concern and are believed to be one of Satoshi Nakamoto’s motivations for creating Bitcoin. This is evidenced by a message embedded in Bitcoin’s genesis block referencing the UK government’s bailout of banks during the financial crisis.
In recent years, one of the key catalysts for Bitcoin’s growth was the US local banking crisis in early 2023, during which Silicon Valley Bank, Signature Bank, and Silvergate Bank either filed for bankruptcy or were forced into liquidation. Bitcoin’s price surged from below $20,000 to over $29,000 in that period, reflecting the public’s waning trust in the US banking system.
However, challenges remain. Earlier this month, Reuters cited a report from Morningstar noting that regional US banks continue to show signs of financial stress despite efforts to boost reserves and customer deposits since March 2023.
### Eight Iranian Banks at Risk of Dissolution
Iran’s banking system has become increasingly fragile due to widespread international sanctions, which block access to global financial networks, restrict US dollar transactions, and heighten risks within the local banking sector. Meanwhile, the Iranian rial continues to lose purchasing power.
Earlier this year, the Central Bank of Iran warned that eight other local banks face the risk of dissolution unless they implement significant reforms.
### Challenges in the Iranian Crypto Sector
Iranian crypto exchanges have not been spared from turmoil either. In June, Nobitex, one of the country’s leading cryptocurrency exchanges, suffered an $81 million hack. The attack contributed significantly to a decline in Iranian crypto flows, which fell by 11% up until July amid ongoing regional conflicts with Israel.
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This latest banking crisis in Iran serves as a stark reminder of the vulnerabilities in traditional financial systems, further fueling interest in decentralized alternatives such as cryptocurrencies.
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