$5.8bn Iran Mall to save troubled bank

$5.8bn Iran Mall to save troubled bank
Iran Mall in Tehran has been dubbed the biggest mall in the world in 2020 upon completion with foreign brands opening up. / bne IntelliNews
By bne Tehran bureau April 9, 2024

Officials from Iran's Judiciary announced the country's largest shopping centre, Iran Mall, is worth IRR3.5 trillion ($5.8bn), ISNA reported on April 8.

Iran Mall is globally recognised as one of the largest malls, boasting a total area of 1.95mn square metres. The massively delayed valuation was conducted in response to a request from Ayandeh Bank (previously Tat Bank), the mall's owner, which is currently grappling with significant financial challenges marked by substantial accumulated losses.

Ayandeh Bank has long been under scrutiny due to its consistent overdraws from central bank resources, distinguishing it from other financial institutions in Iran and significantly contributing to money creation within the country's banking sector.

In response, the Ministry of Economy in Iran took action in a last-ditch effort to acquire a majority (60%) of Ayandeh Bank's voting shares as part of a broader effort to regulate and control banking practices nationally. Notably, the bank held its first board meeting in five years during the third week of October.

At the meeting, Ayandeh Bank unveiled an ambitious plan to boost its capital from IRR16 trillion ($30.7mn) to IRR2.3 quadrillion ($3.6bn), drawing funds from the revaluation of fixed assets and shareholders' contributions. The measure aimed to help Ayandeh Bank meet the minimum capital requirements set by the Central Bank of Iran while also covering a significant portion of its losses.

According to local media, Ayandeh Bank's accumulated losses had amounted to nearly IRR2,880 trillion ($4.5bn) by the end of 2023.

However, the plan was formulated based on an earlier estimate by official experts from the Justice Ministry, who had valued Iran Mall at IRR255 trillion ($4bn). The results of this new assessment not only cover all of the bank's losses but also pave the way for Ayandeh to distribute profits to its shareholders should the trading symbol of Ayandeh be reopened, according to Donya-e Eqtesad daily.

The final decision regarding this move rests with the Central Bank of Iran, which will likely oblige the bank to offer Iran Mall on the stock market, given its directive for lenders to refrain from engaging in non-banking activities.

Founded in 2012, Ayandeh Bank resulted from a merger and acquisition in Iran’s banking industry. It was born after two credit institutions, Salehin Credit Institution and Ati Credit Institution, agreed to merge with Tat Bank.

The bank has been at the forefront of introducing innovative financial solutions in Iran, such as Iran’s first open banking platform. The wide range of digital services offered by the bank helped the bank attract many startups and online businesses in recent years. 

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