One of Iran’s largest private banks has collapsed, and the assets of more than 42 million customers have been absorbed by Iran’s state-owned lender, Bank Melli.
Ayandeh Bank declared bankruptcy on Thursday after accumulating $5.1 billion in losses and nearly $3 billion in debt, local media reported Iran International reported on Friday.
The bankruptcy was declared days after the Central Bank of Iran failed to save the bank, leaving officials with no option but to close it, which had 270 branches across the country.
More than 42 million customers are affected, Iran News Update reported.
While CBI Governor Mohammad Reza Farzin assured Ayandeh customers that they would be able to get their savings back immediately, the incident highlights the risk associated with trust banks that lend deposits to customers, operate with fractional reserves and call for help when things go wrong.
Failures in the banking system were apparently one of Satoshi Nakamoto’s motivations for creating Bitcoin, as evidenced by a message embedded in the Bitcoin genesis block that mentions the British government bailing out the banks.
Meanwhile, one of the catalysts for Bitcoin’s growth in recent years was the local banking crisis in the US in early 2023, where Silicon Valley Bank, Signature Bank and Silvergate Bank filed for bankruptcy or were forced into liquidation.
The price of Bitcoin rose from below $20,000 to over $29,000 that month as public confidence in the US banking system declined.
Earlier this month, Reuters — stating report by Morningstar — noted that regional US banks are still showing signs of financial stress despite increases in reserves and customer deposits as of March 2023.
Eight Iranian banks are at risk of dissolution
Iran’s banking system has become fragile due to widespread sanctions, which block access to international financial networks, limit transactions in US dollars and increase risks in the local banking sector, while the Iranian rial continues to lose purchasing power.
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Earlier this year, the Central Bank warned that eight other local banks were at risk of dissolution if they did not implement reforms.
Iran’s crypto exchanges were not without problems either, as Nobitex suffered an $81 million hack in June.
It was one of the biggest contributors to the 11% drop in Iranian crypto flows through July amid a series of clashes with Israel.
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