The final phase of a bank megamerger involving five military banks and state-owned Bank Sepah was completed on Sunday, the governor of the Central Bank of Iran said.
Ansar Bank, last of the five, held its general assembly on Sunday wrapping up a complicated and arduous project that lasted 30 months, Abdolnasser Hemmati said in his social media account.
The merger involves Bank Sepah, the oldest bank in Iran and one of the three still owned by the government, four banks and one credit institution owned by the Iranian armed forces.
Ansar Bank, Bank Hekamat Iranian, Mehr Eqtesad Bank, Ghavamin Bank and Kosar are the five institutions.
Earlier this month Kosar Credit Institution and Ghavamin Bank merged with Sepah. Two other banks had completed the process earlier in the fiscal year that started in March. Hekamat Iranian was the first in May and was followed by Mehr Eghtesad Bank a month later.
All five now operate under name and logo of Bank Sepah.
The megamerger started in March 2019 as part of the policy of the CBI to streamline the dysfunctional banking industry and improve efficiency.
The megamerger process started in March 2019 as part of CBI policy of the CBI to streamline the dysfunctional banking industry and improve efficiency. It is billed as a crucial move in the past half century
It is billed as a crucial monetary move in the past half century and was a follow-up to decisions by the Money and Credit Council -- the main monetary decision-maker -- and the Supreme Council of Economic Coordination -- an ad-hoc decision-making body comprising heads of the three branches of government.
Hemmati said the merger was critical for reforming the ailing banking industry. "Merging the six banks was a very big and complicated job… which took two and a half years to complete," Hemmati said.
Commenting on the subject, Ebrahim Jamili, head of Iran Economy House hailed it and said the merger will create a stronger bank.
"It was a right decision. These banks operated in isolation and were involved in unhealthy competition that disrupted the financial markets. Now they do not exist," he was quoted as saying by IBENA, the news agency of the Banking and Monetary Research Institute.
Structural Changes
The five banks have 2,800 branches that will join Sepah’s 1,800 branches. Taking stock of the large number of Sepah branches post-merger, Mohammad Kazem Choqazardi, Bank Sepah CEO, said his bank will have to reduce the number of branches to be able to optimize and perform efficiently.
Sepah is planning to cut the branches to 3,500 in three years but insists that it does not necessarily mean layoffs.
Sepah had earlier announced a three-year timeline to close 1,000 branches of the combined lenders after the merger. According to published reports the number of Sepah employees will rise from the present 15,000 to 43,000 post merger.
Hadi Feiz Akhalqi, a Bank Sepah deputy, underscored efforts to address concerns of employees, depositors, shareholders and other beneficiaries.
Concerns will be addressed with “reforms in the management structure of Sepah and the five merging banks.”
