Iran's Bank Branch Closures Continue

EghtesadOnline: Banks and credit institutions continue to reduce their local branches in the past three months, although the overall cuts are not significant, IBENA reported.

News ID: ۷۴۷۲۲۶

04 May 2019

A total of 23,395 branches of banks and credit institutions were operating in Iran in the month to April 21. This is while the total number of branches was 23,549 at during the month to February 19.

The decline, however small, comes as senior authorities emphasize the need to remove unwanted and unhelpful branches to cut costs and encourage customers to embrace mobile banking instead of approaching a physical branch.

Citing studies conducted by the Ministry of Economic Affairs and Finance, Abbas Memarnejad, the deputy for banking, insurance, and state-owned companies’ affairs of the ministry, said the number of bank branches should not exceed 12,000 based on indicators such as net domestic product, population and size of the country, according to Financial Tribune.

According to the report, state-owned banks had a total of 9,930 active branches in the second month of the current fiscal -- Bank Melli Iran 3,315 branches was in first place followed by the Agriculture Bank of Iran with 1,966, Bank Sepah 1,818 and Bank Maskan 1,272 branches.

In recent months there have been reports of impending bank mergers with the aim again to downsize the bloated bureaucracy and do more with less.

Earlier on March 2, the Central Bank of Iran said five military-associated banks and credit institutions, namely Ansar Bank, Bank Hekamat Iranian, Mehr Eqtesad Bank, Ghavamin Bank, and Kosar Credit Institution,  are to be merged with the state-owned Bank Sepah.

The banking system has come under routine criticism from many quarters for the huge number of dysfunctional branches compared to its peers in the region and beyond.

Based on a Word Bank report there were 12.5 bank branches in the world for every100, 000 adults in 2016. The number for Iran in that year was 31.3. Iran’s average is also more than double the MENA average at 14.7 bank branches for every 100,000 adults.

To reach the global average, Iran needs to cut the number of its bank branches to 8,868, which means eliminating a whopping 11,730 branches.

By the same token to reach the MENA average, 10,169 branches must be shut down. To reach the average among countries in the higher income bracket, Iran should slash the number of its bank branches to 10,713, which means doing away with 9,885 branches.