Ties with major foreign banks could bring potential benefits to the economy, according to a senior official at the Central Bank of Iran.
Since the landmark nuclear agreement between Iran and the six world powers, several foreign banks have expressed interest in opening branches in Iran, which is warmly welcomed by the CBI. However, submission of formal applications in this respect will be deferred as long as nuclear sanctions are in place, according to CBI deputy governor, Akbar Komeijani, Eghtesad News website reported.
Private banks will be the first to benefit from such an opening as the majority of local banks are private and many have managed to maintain ties, though limited, with foreign banks during sanctions period that started more than a decade ago.
“Private banks are more agile and compliant with international norms and have less obligations compared with their state-owned counterparts. This places them on a higher pedestal to initiate cooperation with foreign partners, help attract foreign investment and provide up-to-date service to foreign clients,” Komeijani said, hoping that the trend would improve the global ranking of the country’s banking industry.
As to the timing for opening letters of credit, the vice-governor said “The initiative requires stable banking and brokerage relations with foreign lenders and suppliers,” adding that the CBI is determined to follow up the issue. Meanwhile, commercial banks should also start reactivating their frozen accounts overseas and/or open new ones.
Komeijani stressed that the regulator will provide post-sanction support and assistance to local banks and work to upgrade the banking sector to be compatible with international norms and ensure their integration into the global banking network.
Domestic and international stakeholders have often called for an active and robust banking sector in Iran, especially at a time when the crippling economic and banking sanctions are due to be eased in the coming months.
Lack of internationally-acceptable professional skills, poor knowledge of the latest worldwide banking instruments and a decade plus near isolation from the international banking are the main drawbacks of the Iranian banking sector, in particular the state-owned lenders.
The CBI has been saying for months that now it believes in and is committed to preparing all the banks for the post-sanctions era expected to begin in early 2016 and enable them do their share in contributing to economic and business growth.
