How an Iranian bank collapse fueled economic unrest and drove thousands to protest: report

An Iranian bank collapse late last year fueled the economic crisis that drove thousands to protest across dozens of cities over the past two weeks — threatening the Islamic Republic’s control.Ayandeh Bank — which was run by regime cronies — went belly up with nearly $5 billion in losses on a pile of bad loans, according to a Wall Street Journal report.It had offered the highest interest rates of any bank in Iran and drew in millions of depositors — but it relied heavily on the government to print batches of inflationary money, the report said.Ayandeh also practiced self-lending, often lending money to many of the bank founder’s own companies, according to the report. The bank was “a Ponzi scheme,” the director of bank supervision at the Iranian central bank said last year.Its largest investment was the Iran Mall, a structure twice the size of the Pentagon that opened in 2018 with an IMAX movie theater, library, swimming pools, indoor gardens, a car showroom and a hall of mirrors made to look like a 16th-century imperial Persian palace.The opulent, city-size mall opened its doors as the nation’s currency, the rial, spiraled, wages fell, food prices skyrocketed and a water and energy crisis grew so severe that President Masoud Pezeshkian proposed moving the capital from Tehran closer to the Indian Ocean coast. “It’s yet another example of the kinds of stories of corruption or unfair practices that give a lot of ordinary Iranians the impression that the system has been rigged against them, or at least rigged in the favor of a small number of elite,” Esfandyar Batmanghelidj, CEO of the Bourse & Bazaar Foundation, an economic think tank, told the Journal.The Iranian government folded the bank into its largest state-owned lender, Bank Melli, and rushed to print loads of money to try to cover it up — but it was too late.At least five other Iranian banks are nearing collapse, according to the report.The bank crisis hit at the same time as a ...