Banking Giant ICBC Seeking Iran Access

Officials from the Industrial and Commercial Bank of China, the world’s largest bank by total assets and market capitalization, has held talks with the Central Bank of Iran in recent weeks to discuss the procedure of starting operations in Iran, a CBI official said on Friday.  

“ICBC is earnestly pursuing plans to enter Iran…We are waiting for the Chinese bank to submit the documents…even the location for the bank's presence has been decided ,” Hussein Yaqoubi, CBI deputy for international affairs was quoted as saying by  IBENA, a news website close to the bank. 

“The Chinese bank’s presence in Iran will be a major step in reviving [Iran's] banking creditably at the international level,” he said.

Iran is struggling to raise tens of billions of dollars in foreign funding for its infrastructure projects after the sanctions were eased in January. Large European banks have mostly kept their distance, worried that they could fall afoul of residual US sanctions.

Transferring banking technology and expertise, and introducing new services will help enhance Iran’s banking sector through cooperation with the Chinese banking giant, Yaqoubi said. “It will also help promote competition.”

The official however did not specify whether ICBC is planning to open a branch or a representative office in Tehran. 

With total assets worth US$3.616 trillion, ICBC is the top lender on The Banker's Top 1,000 World Banks rankings for 2016 and first on the Forbes Global 2,000 list of the world's biggest public companies in 2016. In January Yaqoubi had said that ICBC was set to help Iran with financing and treasury operations.

It is one of China’s big four state-owned commercial banks. Bank of China, another member of the big four club, has also expressed willingness to enter Iran and open a representative office.

During a meeting with CBI officials in late October, Chen Siqing, Bank of China's CEO, said his bank was looking to open a representative office in Iran as a precursor to opening a branch. 

So far South Korea’s Woori Bank is the first foreign lender to open a representative office in Tehran since the lifting of the sanctions earlier this year. 

Swift Sanctions Screening 

Referring to the sanctions screening system created for SWIFT – the inter-bank messaging system – Yaqoubi said: “We have the approval for purchasing the software and will be equipped with the system within a month.”

Sanctions screening has been developed to screen users’ incoming and outgoing messages against the latest sanctions lists. It will instantly alert its users to any matches. The system maintains some 30 sanctions lists from all the major regulatory bodies.

Iran regained access to the SWIFT in January after being cut off from the network due to the nuclear-related sanctions. 

No Frozen Assets 

The official also noted that Iran no longer has any assets frozen in overseas banks. He, however, admitted that “We face some snags in trying to transfer the assets from two Asian countries.” He did not name the two countries. 

“Talks are underway to solve the issue,” he said. “They are trying to get a certificate from the US Treasury's Office for Foreign Assets Control (OFAC), in order to transact the money.”

Last week the US Treasury reassured Brazilian banks they can finance trade with Iran without fear of sanctions, opening the way to billions of dollars in potential exports of jet planes, buses and equipment.