A cooperation agreement has been signed by Tejarat Bank and China Development Bank, based on which the Chinese lender will provide a $300 million loan to finance Iranian projects in the latest development of collaboration between Iranian banks and their international counterparts.
With CDB's representatives in attendance, a term sheet was exchanged between the two parties on Saturday, Tejarat Bank reported on its website.
A term sheet is a nonbinding agreement setting forth the basic terms and conditions, under which an investment will be made. A term sheet serves as a template to develop more detailed legal documents. Once the parties involved reach an agreement on the details laid out in the term sheet, a binding agreement or contract that conforms to the term sheet details is then drawn up.
According to the agreement, Tejarat Bank will receive a $300-million loan from CDB to finance the projects of Telecommunications Company of Iran.
CDB is the world’s largest development finance institution and the largest Chinese bank for foreign investment and financing cooperation, long-term lending and bond issuance. It ranked 87th on the Fortune Global 500 list in 2015.
By the end of 2015, its assets grew to RMB12.62 trillion ($1.83 trillion), a balance of loans of RMB9.21 trillion ($1.33 trillion), and a cumulative recovery rate of 98.78% that continued to lead the industry for the 16th consecutive year.
Established in 1979, Tejarat is the sixth largest commercial bank in Iran. The privatized lender has six international branches in Paris, London, Hamburg, Beijing, Dushanbe and Dubai.
From February 2016 until Sept. 20, 2016, Tejarat Bank succeeded in establishing ties with 65 active correspondents.
Tejarat had also signed an agreement with Export-Import Bank of China before. Under the agreement, the Chinese bank was supposed to finance two major petrochemical and telecoms projects. The terms of the agreement, however, might have been extended to include schemes in auto and energy sectors, according to Tejarat Bank’s official website.
China is one of the largest importers of Iranian oil and a major investor in the country’s upstream sector. It was also one of the first countries that welcomed expansion of bilateral banking relations with Iran to cover industries in the post-sanctions era.
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