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Iran’s corrupt banking system has collapsed spectacularly as Ayandeh Bank—operated by regime insiders with deep military and IRGC ties—crumbled under $5 billion in fraudulent loans, sparking nationwide protests that threaten the 50-year Islamic Republic.
Story Highlights
- Ayandeh Bank collapsed in late 2025 with $5 billion in bad loans tied to IRGC-connected borrowers and self-lending schemes
- The failure triggered 18+ days of nationwide protests and forced a government bailout through merger with state-owned Bank Melli
- Five additional banks, including IRGC-linked Sepah Bank, face imminent collapse as Iran’s currency plunged 84% in 2025
- Experts warn the banking crisis represents a “crescendo of legitimacy loss” for the regime following military defeats by Israel
Regime-Connected Bank Exploited System Through Self-Lending
Ayandeh Bank’s collapse exposed the corrupt inner workings of Iran’s regime-controlled banking sector. Founded in 2013 by Ali Ansari, a businessman closely tied to former President Mahmoud Ahmadinejad, the bank operated as a slush fund for politically connected borrowers. Over 90% of the bank’s assets were tied to self-managed projects, including the massive Iran Mall development, creating a house of cards that inevitably crumbled under its own weight.
The bank’s leadership, described as “individuals affiliated with the regime,” systematically directed loans to military and IRGC-connected entities without proper collateral or oversight. This pattern of corruption became endemic across Iran’s banking sector after 2018 US sanctions forced banks to rely on central bank money printing for liquidity, enabling widespread fraud and speculation.
Systemic Banking Crisis Threatens Economic Collapse
Ayandeh’s failure represents just the tip of the iceberg in Iran’s banking sector meltdown. Economists warn that five additional banks face imminent collapse, including the state-owned Sepah Bank, which maintains direct ties to the IRGC through military lending programs. With 70% of Iran’s banking sector under government control by 2019, the regime has created a system where public funds subsidize insider corruption while ordinary citizens bear the inflationary consequences.
The central bank’s response—printing money to provide emergency liquidity—has devastated Iran’s currency and triggered food inflation of 72%. Capital flight accelerated to $10-20 billion in 2025 as confidence in the banking system evaporated. This financial hemorrhaging occurred amid Iran’s humiliating 12-day military defeat by Israel and the US in June 2025, further undermining regime credibility.
Banking Fraud Ignites Popular Uprising Against Regime
Unlike previous banking crises, Ayandeh’s collapse directly sparked nationwide protests that have continued for over 18 days. The bank’s failure served as a “fuse” that ignited broader frustration with regime corruption, economic mismanagement, and military failures. Merchants and middle-class Iranians, traditionally more cautious about political activism, have joined the protests as their economic prospects collapsed alongside the banking system.
Former IMF official Adnan Mazarei characterized the crisis as a “crescendo of legitimacy loss” for the Islamic Republic. The regime’s response—imposing $10 billion in austerity cuts while bailing out corrupt banks—has only intensified public anger. Tehran residents report the middle class has been “destroyed” by inflation and currency devaluation, creating conditions that economists say represent the greatest threat to the regime’s 50-year rule.
Sources:
Ayandeh Bank failure deepens Iran’s economic crisis
Iranian Banking Crisis Spreads as Protests Continue
Ayandeh Bank Collapse Fuels Iran Protests