Economy, Business And Markets

Bank Melli Says European Banks in Contact

Bank Melli Says European Banks in ContactBank Melli Says European Banks in Contact

A number of European banks have made contact with banks in Iran after the nuclear framework agreement was reached between Iran and the P5+1 (five permanent members of the UN Security Council plus Germany) on April 2 in Lausanne, Switzerland, According to a senior banking official.

"This week, a European bank is bound to start preliminary negotiations with a number of Iranian banks," said Gholam Reza Panahi, Bank Melli foreign exchange deputy manager. He did not however name any of the banks.  

The official said that Bank Melli is ready to expand its services once western sanctions are lifted. The services include "setting up overseas branches, money transferring, international banking services that can ease imports and exports of goods, and brokerage services including foreign exchange transfers," IRNA reported citing the banker.

Nuclear-related sanctions bar Iranian banks from cooperating with multinational banks. The recent agreement, which is expected to be finalized by June 30, is expected to remove all sanctions imposed by the EU and US as well as the resolutions adopted by the UN Security Council over Tehran’s nuclear program.

New reports suggest that Belgium-based Society for Worldwide Interbank Financial Telecommunication; SWIFT, has started talks with Iranian banks to resume cooperation.

The company that provides global electronic banking systems has already held a series of meetings with Iranian private banks, Tabnak News Agency reported.

In March 2012, SWIFT expelled as many as 30 Iranian financial institutions following US-led sanctions against Iran over its nuclear energy program.

On the issue of foreign exchange the official said that the amount of forex which will enter the country depends on the amount of exports. If trade conditions are eased, non-oil exports will consequently increase, he added.

It had been projected that after the framework deal, most foreign currencies would sharply depreciate against the rial, an expectation which did not come true.

“Fluctuations in the currency market depend on realistic economic variables and market needs,” not the nuclear agreement, Panahi said.

“The Central Bank of Iran (CBI) acts as the major regulator of the market” he said, explaining that supply and demand are key to price. With the correct supervision of the CBI, during the past year which ended March 21, foreign exchange rate fluctuations were effectively controlled and stabilized.