Iran’s oldest and one of largest banks on verge of bankruptcy

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Bank Melli

Bank Melli

Houthis

Houthis

Iran’s Bank Melli, the oldest and one of the biggest banks in the country is on the verge of bankruptcy after losing 675 trillion rials last year, equaling $2.8 billion in free market exchange rate. The losses equal 73 percent of the bank’s capital.

The bank has published its financial reports for the previous Iranian calendar year ending March 20, 2021, after years of silence. Iranian law says that if an entity’s losses exceed 50 percent of its capital the shareholders should convene a meeting and dissolve the company.

The bank was established in 1927 by an act of parliament as part of Iran’s modernization process. A former US State Department trade official, Arthur Chester Millspaugh, was its founder who helped Iran free itself borrowings from foreign governments and banks at unfavorable terms. Millpaugh reorganized the country’s finances by establishing modern budget and management practices during the reign of Reza Shah, Iran’s modernizing king.

At the time Iran regarded the United States as a liberator that helped its independence in the face of British and Russian influence and pressures.

Iran’s banks are all directly or indirectly owned by the state or state entities and have suffered from corruption and mismanagement in recent years. Government and its companies borrow money from their banks that ultimately lose money and turn to the Central Bank to be rescued.

Source » trackpersia

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