The Europaisch-Iranische Handelsbank AG in Hamburg has restarted services to Iran since March 1 as the first European lender to do so after the lifting of the sanctions. Customers can now transfer money through EIH Bank inside Germany or receive payments from Iran, the German n-tv website reported.
The lender has a German license, but is owned by the Iranian state. Iran’s Mines and Industry Bank is the biggest shareholder with Bank Mellat and Tejarat Bank also owning stakes. Iranian merchants had founded the bank in the early 1970s to support trade between Europe and Iran. The bank’s activities had been frozen for five years, as the lender was hit with nuclear-related sanctions.
The embargo hit the Iranian economy hard. As a consequence, much of the EIH staff was laid off and the bank’s assets were frozen. The bank was also reconnected to the international inter-bank payment system, SWIFT in mid-February after Iran’s nuclear deal with six world powers came into effect.
Banks on the Defensive
According to n-tv, the German economy hopes that the return of Iran to the world stage will prove to be lucrative for Europe’s largest economy as Germany was Iran’s biggest exporter prior to the sanctions.
The German banks, however, have shown caution in doing business with Iran so far. Not even simple transfers are yet possible for German companies working with Iranian businesses and no loans are granted for doing business with Iran.
European institutes and lenders are once bitten and now twice shy away from doing business with Tehran as they fear being subjected to US penalties again. One of the root causes of the fear is that a part of the US sanctions against Iran still persists due to what US officials claim is “Iran’s financing of international terrorism.” The industry’s giants such as Commerzbank and Deutsche Bank were sentenced to high penalties in the past and now prefer a higher degree of caution.
However, Commerzbank said in January it was reviewing the possibility of returning to Iran. A spokesman for Germany’s second largest lender said Commerzbank is monitoring the development very closely and is reviewing a possible adjustment of its business policy.
Minister Disappointed
The German TV network reports that Germany’s Vice Chancellor and Economics Minister Sigmar Gabriel is dissatisfied with the reluctance of German banks toward doing business with Iran. He believes that Germany would lag behind other competitors in seizing the opportunity of the opening of Iran’s economy and markets to the international business arena. He has reportedly ordered his deputy Matthias Machnig to talk the German banks into revitalizing ties with Iran but without considerable success so far.
Machnig is scheduled to speak next weekend in Tehran at a major financial conference, the Second Iran-Europe Business Forum which hosts sixty guests from European countries. Among the speakers will be the Governor of the Central Bank of Iran Valiollah Seif and Roads and Urban Development Minister Abbas Akhoundi.
The conference is organized by Nader Maleki, whose eponymous company is best known for hosting the Euro Finance Week in Frankfurt. It was on the sidelines of this event that the first Iran-Europe Business Forum was held attended by Seif and a number of European bankers.
Because of the sanctions, German exports to Iran fell to a level of 2.5 billion euros per year. However, business associations expect an increase of up to 10 billion euros within five years.
