Economy, Business And Markets

Rating of Banks, Companies by International Agencies Soon

Rating of Banks, Companies by International Agencies Soon Rating of Banks, Companies by International Agencies Soon

The head of Monetary and Banking Research Institute says representatives from international rating agencies visited Tehran during the Ninth International Exhibition of Exchange, Bank and Insurance – FINEX 2016 – last week to begin negotiations regarding the rating of Iranian banks and companies.

Ali Divandari expressed hope that the ranking process begins as soon as possible to facilitate international trade and financial transactions.

He emphasized the importance of rating Iranian banks by credible international agencies, calling it a prerequisite for normal ties between Iranian and major international banks.

Noting that the banks need to take the necessary steps to reach an accord with these institutions, he said: “To utilize the window of opportunity created after the nuclear agreement, the process of rating Iranian banks and companies needs to be pursued in the interest of the economy,” IRNA reported.

One year after the landmark nuclear deal with six world powers in Vienna, he said it can now be said that the grip of sanctions has been broken and Iranian banks are gradually reconnecting with the international banking system.

The official warned, however, that a return to the pre-sanctions era would be a lengthy and time-consuming process, and “it should not be expected that the big banks will make the reconnections immediately.”

  Back to Transparency

“Small and medium-sized banks and banks that have the experience of working with Iran’s banking system have re-established links with Iran and the big players will enter the fold gradually.”

The head of MBRI believes that in order to reconnect with foreign lenders “we need to also be ready and that readiness is based on transparency in the financial performance of banks.”

He further elaborated: “In the first step, the financial statements of banks need to be transparent and in order to do that, the Central Bank of Iran approved the new financial statements in January. It is expected that the statements with the new formats be approved in the banks’ annual board meetings.”

The new statements “have an 80% compatibility with international standards and foreign institutions can have a better idea of Iran’s financial statements.”

As to the disagreement between the CBI and the Audit Organization (affiliated to the Economy Ministry), Divandari explained: “The latter believes that the former has entered the orbit of setting standards and by doing so overstepped its boundaries.

The CBI, on the other hand, believes that the current financial statements are not up to the standard and incompatible with its monetary and banking policies, therefore the Audit Organization needs to address these issues. There is also supervisory conflict between the two organizations which we hope will be fixed soon.”