The establishment of Russia's second-largest bank, VTB Bank, in Iran is expected to help lift trade between the two sides and other foreign nations, according to leading economists.
Shahin Shayan-Arani, an economist, outlined the positive move by the Central Bank of Iran saying that the launch of a VTB branch in Iran would undoubtedly benefit both sides.
"This is a positive step by the CBI to support economic and trade between both countries," Shayan-Arani said in a talk with IBENA. VTB opened a representative office in Tehran this week.
He expressed optimism about other dimensions of establishing the office, stating that it is a sign of the revival of cooperation between a reputable international bank and Iranian businesses who have working relations in and with Russia and other countries.
Shayan-Arani noted that the VTB has opened a “reliable and expedient path for two-way financial transactions. "Undoubtedly, the establishment of this bank branch will have a positive impact on the financial and economic affairs of our country, especially in facilitating and restructuring commercial exchanges between the two sides, which obviously is of great importance under the current [difficult] economic climate."
Furthermore, the economist emphasized the necessity of establishing branches of Iranian banks in Russia. "I must say that the presence of one Iranian bank in Russia is not enough…Branches of more banks can facilitate the financial and credit aims of both countries. As such, setting up branches of Iranian banks would contribute to healthy competition in the provision of banking services.”
Highlighting other benefits of VTB representation in Iran, Shayan-Arani noted that it restores credibility of economic stakeholders in the country.
"Asa opposed to rumors and negative propaganda, the presence of a large foreign bank in Iran indicates, among other things, that a major international lender bank is operating in the country. Moreover, now foreign businesses can return and interact with their Iranian peers with trust and confidence."
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Referring to the coming of VTB Bank in Iran as a venue for other foreign banks, the economist stated, "We may have seen the opening of representations of some foreign banks in the past. This time, the establishment of a reputable international lender is a significant development that can pave the way for the entry of other foreign banks.”
Shayan-Arani referred to the move as timely and much-needed to help "increase in the credibility and reputation of foreign trade” in Iran.
"VTB Bank has created a platform for other foreign banks to mobilize courage and audacity to (re)enter Iran. Given that VTB is among the major foreign banks, the incentives and encouragement for their return will certainly be amplified."
VTB did not need advertising campaigns to come to Iran and must have recognized the country's potential and opportunities, hence their willingness to collaborate and establish a branch, he stressed.
Regarding the visit of the Governor of the Central Bank of Russia to Iran to participate in the ACU meeting, Shayan-Arani described it as a positive move. "On the sidelines of the summit, important meetings on expanding monetary and banking cooperation were held."
Cooperation between the two countries gained momentum last year amid western sanctions on Moscow and Tehran. In 2022 both sides reached agreements to expand interaction, from barter supply deals for Iranian turbines, spare parts and aircraft equipment, to contracts for joint construction of gas pipelines.
The CBI and Russia signed a deal in January to connect their national interbank communication and transfer systems to help boost trade and ease two-way bank transactions.
Per the deal, 52 branches of Iranian banks and four unnamed foreign banks were to use Iran's local interbank telecom system, known as SEPAM, to connect with 106 banks using Russia's System for Transfer of Financial Messages or SPFS.
