The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Banking

Private problems limit Iran's banking system

State banks are geared to an economy that is mainly state controlled and they dominate much of Iran's financial sector. But the six public banks are starting to fund the private sector, while newly formed, privately owned banks are finding their own niche market through better services and funding. Kate Luxford reports.

Iran's private sector banks

Momentum is building slowly in Iran's
private banking sector

IRAN'S RECEIPTS FROM energy exports are at record levels. However, all but the most conservative of the ruling elite have long recognized that this bounty must form the basis of a more diversified economy if growth is to be sustained and high unemployment and pervasive poverty are to be eliminated. The legislative framework recognizes this: privatization, the fostering of private enterprise and the attraction of foreign investment and expertise have all – in theory – been provided for in recent years.

Implementation is another matter. The state and quasi-state sectors built up since the 1979 Islamic revolution remain entrenched, populist measures such as uneconomic consumer subsidies are politically difficult to abandon, and the government continues to run large budget deficits. Developments in Iran's banking sector, which lags in its adaptation to the needs of a liberalizing economy and is tightly controlled by the central bank, clearly illustrate the challenge.

The sector has been dominated by state-owned banks since the banks were nationalized after the revolution: some 37 financial institutions were merged into six public banks – Bank Refah, Bank Melli, Bank Saderat, Bank Tejerat, Bank Mellat and Bank Sepah.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree