The bank built the largest mall in the world, but also racked up massive debt and gave loans to insiders.

Tehran, Iran – Authorities have merged one of Iran’s largest private lenders into the country’s biggest state-run bank in a move that highlights a deeply troubled economy and will further squeeze average citizens as pressure from the West grows.

The central bank on Thursday announced that Ayandeh Bank, privately owned by one of Iran’s wealthiest families, would be dissolved and merged with Bank Melli, the government-run national bank, and that Ayandeh branches across the country would be transformed into Bank Melli branches by Sunday.

Customers were told their accounts and deposits are safe, and all contracts remain under the same conditions. But after years of murky operations and central bank interventions, Ayandeh had racked up losses on a scale that impacted Iran’s macroeconomics, so its bailout will not leave Iranians unscathed.

How did we get here?

Ayandeh began amid a crisis in the 2010s caused by corruption and lack of regulatory supervision over the ailing banking system, experts told Al Jazeera, at a time when Iran was reeling from United Nations sanctions over its nuclear programme.

That was when hundreds of unlicensed financial institutions linked with parastatal, military, or religious foundations mushroomed across the country.

They offered exorbitant interest rates to attract cash away from the banks, and did not re