No Restriction for German Finance for Iranian Projects

German banks will soon finance major Iranian projects, as bilateral banking relations expand, announced the head of financial institutions at the Euler Hermes insurance.

According to Jan-Philipp Apking, "there is no limit" on banking interactions between the two countries.

"Much efforts have been put so far in order to expand exports to Iran with the help of the German government," Apking informed attendees at the final day of the Fourth Iran-Europe Banking and Business Forum in Tehran, the news website of Monetary and Banking Research Institute reported.      

As outlined by the official with the prominent export credit guarantee firm, more than $20 billion were brought into Iran in 2016, which is yet to reach the ideal amount “because Iran has always been and is an important customer for the German industries”.

He did, however, note that trade ties between Iran and Germany have increased by 25%.

Before international sanctions cut off the Iranian banking system from the world and hindered its trade capabilities, Iran-Germany trade exceeded $203 billion in 2004 and Iran was the second most important target country for German exports.

The trade representative of Germany in the high-profile business forum, co-hosted by the International Bankers Forum founder, Nader Maleki, and MBRI, referred to the above fact as the reason for the German interest in reestablishing significant trade ties with Iran.

“Our policies now revolve around the principle that there is no limit to banking interactions between Iran and Germany,” he said.

Apking said past experiences show that to realize this goal, patience is key so that even bigger accomplishments and better progress than the past can be achieved. He noted that it would be better for Iran and Germany to revive their ties by engaging in deals on a smaller scale, so that the way can be paved for bigger deals as time goes by.

“Letters of credit between Iran and Germany are now open and we have banking transactions with a number of banks, including the Bank of Industry and Mine, Middle East Bank and many other Iranian banks,” he said.

Apking considered this as a sign that if current progress is maintained and strengthened, Germany will be able to finance major Iranian projects in the foreseeable future.

Euler Hermes is a major ECG, which reopened its coverage for Iran in late June when Iran repaid all its debts of about €500 million. The fact that Hermes is covering projects and imports to Iran is a positive sign, as this helps remove the doubts of major German and European banks about resuming transactions with Tehran.