European Finance Held Up by Banking Issues

German investors received more than $2 billion in loans in 2016 to finance Iranian projects, but these have been held up for various reasons, an official of the German financial regulatory authority BaFin announced.

“Iranian banks have been struggling with many challenges to reconnect to the global banking network, even after more than a year has passed since Iran’s nuclear deal with world powers,” Peter Kruschel, director of BaFin, was quoted as saying by IRNA during the Fourth Iran-Europe Banking and Business Forum held in Tehran this week.

According to Kruschel, this might be due to a significant obstacle in transferring money to and from Iran through the banking system.

In March 2012, the global transaction network SWIFT cut off Iranian banks over EU sanctions, which shut down a major avenue of doing business with the rest of the world.

In February 2016, after the end of a four-year restriction, most Iranian banks regained access to SWIFT.

Iran’s Ministry of Economic Affairs and Finance recently published a report detailing the performance of seven Iranian banks regarding correspondent relations, indicating that the international banking system is gradually warming up to reestablishing ties with the country following the nuclear deal signed in Vienna on 14 July 2015.

Kruschel said Iranian banks have now opened a few branches in European countries, although most banks of these countries are not eager to engage with their Iranian peers and only a couple of small European banks have interactions with their Iranian counterparts.

“This trend is not frustrating, but we must think of quickening the pace of collaboration between banks,” he said.

Governor of the Central Bank of Iran Valiollah Seif had previously said relations between Iranian banks and their counterparts have become more serious than before.

“The central bank’s statistics recorded 633 correspondent banks for Iran in the year to March 2007,” he had said.  According to Seif, the total number of correspondent banks had experienced a downtrend due to the intensification of sanctions, but after the removal of sanctions, the trend has reversed.According to the latest CBI statistics, in the 10 months to January 19, 2017, 234 correspondent banking relations were established by Iranian banks, which are expected to increase in the near future.