Foreign Banks Setting Up Iran Branches

A number of foreign banks have submitted applications to set up branches in Iran, the Central Bank of Iran's deputy for foreign exchange affairs announced.

"These banks will be able to open branches in the country when CBI issues licenses after they have submitted the necessary documents," Gholamali Kamyab also told IBENA.

Kamyab did not name any of the banks that have submitted their applications for opening an Iran branch.

As an example of foreign banks, which have already established branches in Iran following the lifting of sanctions, Kamyab referred to the South Korean Woori Bank and Bank Muscat.

After economic sanctions on Iran were lifted in January, Woori Bank sent experts to study the Iranian market and gained the approval of CBI on April 12 to open an office in Tehran. The bank launched a Tehran office on May 2 to make it the first South Korean bank to set up office in Iran.

Bank Muscat received the regulatory approvals to open a representative office in April last year. The bank said it planned to open an office in Iran in late February and the office was opened later that year. It was one of the first foreign financial firms to establish a presence in the country since the international sanctions.

Following Iran's nuclear accord with world powers, formally called the Joint Comprehensive Plan of Action, which saw the lifting of international sanctions targeting the banking system, Iranian banks were able to revive ties with their foreign counterparts.

This is while, says the CBI official, "there was no link before the implementation of JCPOA" in January 2016, "especially with European banks". Iran was even unable to make payments across Asia, he added.

During this period, all of Iran's payments and services were made through a handful of countries and the country was only able to receive its oil receipts through these nations that were fewer than five. What is more, payments were made via unofficial channels that entailed extra costs.

Correspondent Ties

Kamyab, who is also a vice governor of CBI, said the Iranian banking system has currently established correspondent relations "with more than 249 banks throughout the world", among which "major international banks can also be seen".

The official admits, however, that problems still persist with a number of countries with which Iran has been unable to form close banking relations and is facing hurdles in payments among other things.

"In accordance with JCPOA, so far we have been unable to make payments in the US dollar and therefore they take place in euro," he said in reference to the currency of choice in international transactions.

However, the country is allowed to hold assets in the greenback and can make transactions in that currency as long as it does not pass through the US financial system, because if it did, they will expropriate it based on their regulations.

In light of the fact that residual US sanctions prohibit Iran from using the dollar, the country announced in late January that it will stop using the American currency as its currency of choice in its financial and foreign exchange reports from the new fiscal year that began in March and instead opt for the euro.