What led to the violent protests in Iran? A bank - here's the real story

Iran’s deepening economic crisis reached a breaking point late last year when a major private bank collapsed, triggering outrage that has spilled into streets across the country. An Iranian bank tied to regime insiders imploded under the weight of bad loans and risky practices. Public anger escalated as inflation surged and livelihoods disappeared. Now, thousands of Iranians are paying the price, and taking to the streets.

The failure of Ayandeh Bank did more than wipe out billions in losses. It exposed years of alleged corruption, financial mismanagement, and political favoritism, fueling protests that now threaten the Islamic Republic’s grip on power.



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What went wrong at Ayandeh Bank?

Ayandeh Bank, once one of Iran’s most aggressive private lenders, collapsed with nearly $5 billion in losses, according to a Wall Street Journal report. The bank was run by individuals with close ties to the regime and attracted millions of depositors by offering the highest interest rates in the country.

Behind the scenes, however, Ayandeh relied heavily on the government printing new money to stay afloat, a move that worsened inflation. The bank also engaged in self-lending, frequently issuing loans to companies owned by its founder, as per a report by The New York Post.


The director of bank supervision at Iran’s central bank described the operation bluntly last year, calling the bank “a Ponzi scheme.”


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Why did the bank become a symbol of inequality?

Ayandeh’s most visible investment was the Iran Mall, a massive commercial complex that opened in 2018. The structure, twice the size of the Pentagon, featured an IMAX movie theater, a library, swimming pools, indoor gardens, a car showroom, and a hall of mirrors modeled after a 16th-century Persian imperial palace.

The mall opened as ordinary Iranians faced collapsing wages, soaring food prices, a plunging currency, and worsening water and energy shortages. The contrast between luxury and hardship became impossible to ignore, as per a report by The New York Post.

“It’s yet another example of the kinds of stories of corruption or unfair practices that give a lot of ordinary Iranians the impression that the system has been rigged against them, or at least rigged in the favor of a small number of elite,” Esfandyar Batmanghelidj, CEO of the Bourse & Bazaar Foundation, told the Journal.


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How did the crisis spill into the streets?

After the bank collapsed, the government folded Ayandeh into the state-owned Bank Melli and rushed to print large amounts of money to contain the fallout. The effort failed to calm the public.

At least five other Iranian banks are now nearing collapse, according to the report, deepening fears about the financial system.

The crisis coincided with a 12-day war with Israel and the United States in June, followed by renewed threats in November tied to Iran’s nuclear and missile programs. Sanctions tightened, oil revenue was diverted, and U.S. pressure disrupted money flows from Iraq, as per a report by The New York Post.

As the rial’s value collapsed, shopkeepers struggled to price goods fast enough. Importers lost money before products even reached shelves. Hundreds of merchants, a group that rarely protests, joined demonstrations in Tehran.

Thousands of people have protested across dozens of cities despite internet blackouts and a government crackdown. According to the Human Rights Activists News Agency, more than 2,500 people have been killed during the unrest.

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Who has been held responsible?

Days after Ayandeh’s collapse, the United Kingdom sanctioned the bank’s founder, Ali Ansari, calling him a “corrupt Iranian banker and businessman.” British officials alleged that Ansari helped finance the Islamic Revolutionary Guard Corps, as per a report by The New York Post.

Ansari, who owns a multimillion-dollar mansion in London and has ties to former President Mahmoud Ahmadinejad, denied responsibility.

In an October statement, he blamed the collapse on “decisions and policies made beyond the bank’s control.”

Pressure had been building for years. Politicians from across Iran’s political spectrum had warned that Ayandeh’s reliance on newly printed money would fuel inflation. In October, Iran’s judiciary chief, Gholamhossein Mohseni-Ejei, threatened legal action if the central bank failed to act. The bank was shut down the following day.

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Why hasn’t the government contained the anger?

As living costs surged, the government cut bread subsidies and required imported gasoline to be sold at market prices. It attempted to ease tensions with a monthly cash payment of 10 million rials, about $7 per person, but the move failed, as per a report by The New York Post.

For many Iranians, the collapse of Ayandeh Bank became a symbol of a broader system they believe no longer works for them.

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FAQs

Why did Ayandeh Bank collapse?
It failed under billions in bad loans, self-lending, and reliance on printed government money.

How did the bank collapse affect protests?
It intensified inflation and public anger, pushing thousands to demonstrate nationwide.