While the authorities in the US and EU continue to drag their feet on sanctions and hamper cooperation with Iran, Russian banks are keen to fill the gap in the opening Iranian market, according to Russian newspaper Izvestiya as reported by Sputnik.
Russian banks are striving to be the first in line after the partial lifting of sanctions against Iran, Izvestiya reported on Wednesday.
In January the US and EU announced the lifting of all economic and financial sanctions against the Islamic Republic associated with its nuclear program, enabling Tehran to access previously frozen assets, use international financial messaging services such as SWIFT, and sell oil and other raw materials to EU countries. Experts in the banking sector told the newspaper that while western banks are waiting for guidance from their authorities on the prospects for cooperation with Iran, Russian banks are keen to get a head start.
Russian banks do not have a presence in Iran, while one Iranian bank operates in Russia, called “Mir Business Bank.” The bank is a subsidiary of Bank Melli Iran and 70 % of its customers import and export goods such as grain, timber and food products between Russia and Iran.
“Iran is emerging from years of sanctions, the quality of banking services there has declined and Russian players can enter the market with interesting products for business and the public,” said Anatoliy Aksanov of Russia’s Association of Regional Banks.
“It is obvious that the amount of trade between Russia and Iran is going to increase. It would be expedient to find a niche while there isn’t stiff competition from other international organizations,” Aksanov explained.
“Our banks can start with servicing bilateral contracts with Iran, similar to Mir Business Bank. Then the volume of banking services can be extended, and if there is demand then smaller banks can enter the market,” said Tamara Kasyanova of consulting firm 2K.
Finance Cooperation
A source in Russia’s central bank told Izvestiya that it recently held talks with its Iranian counterpart to discuss cooperation in the financial sphere. “Russia and Iran are preparing to increase trade, so the question has arisen of closer cooperation with the central bank,” the source said.
In November last year Russia’s trade representative in Iran Andrey Lugansky told Rossiyskaya Gazeta that Russia and Iran are discussing the creation of a joint clearing bank to enable the two countries to increase their trade.
The volume of trade between the two countries was $5 billion in 2015, much of which took place through intermediaries such as Cyprus and the UAE, he said. By importing from countries to which Iran exports oil, such as China, South Korea, India and Japan, Russia’s exporters should be able to sell the technology Iran needs using those currencies rather than the dollar and euro, Lugansky explained.
While Russian firms are keen to increase trade with Iran, their western counterparts still appear fearful of repercussions from the authorities.
While they have lifted some sanctions following the July 2015 nuclear agreement between Tehran and the P5+1 countries, the US and EU continue to impose some sanctions against Iran associated with its ballistic missile program, which Tehran insists is purely defensive.
