Bank Hekmat Iranian, a private lender affiliated to the Army, officially merged with the state-owned Bank Sepah following an extraordinary meeting on Saturday.
"Bank Hekmat Iranian is now the first of five military-affiliated banks to merge with Bank Sepah," the CEO of Bank Sepah Mohammad Kazem Choghazardi said.
"As of June 1 all branches of Bank Hekmat Iranian will operate under the name of Bank Sepah."
The move to merge five banks and credit institutions -- affiliated to military organizations – with Sepah started in March 2019 as part of the Central Bank of Iran’s policy to reform the dysfunctional banking sector, improve efficiency and eject banks sinking in red ink.
The merged entities are to include Ansar Bank, Bank Hekmat Iranian, Mehr Eqtesad Bank, Ghavamin Bank and Kosar Credit Institution.
According to the CBI boss Abdolnasser Hemmati, the merger of Mehr Eqtesad Bank will be completed in early June.
The five banks have 2,800 branches that will join Sepah’s 1,800 branches. Sepah, however, is planning to cut the number of branches to 3,500 in three years, though it insists that cutting branches does not necessarily translate into layoffs.
After the merging process is over, the number of Bank Sepah workers will rise from the present 15,000 to 43,000.
Unsustainable Payroll
Observers and free market pundits have been quoted as saying that such a big payroll would be untenable for Sepah or for the matter any other lender wanting to make a profit and do more with less under the extraordinary difficult economic climate.
The CBI has assured the employees of merging entities that there will “be no disruption in their career and their rights would be fully respected.”
From what is known, 24 million customers have 2,150 trillion ($17.9 billion) in deposits with the five military-affiliated banks. Likewise, lenders have given 1,300 trillion rials ($10.8 billion) in loans.
The merger is a follow-up to earlier decisions by the Money and Credit Council – the main monetary decision-maker -- and the Supreme Council of Economic Coordination -- a body comprising heads of three branches of government to address major economic issues.
