State-owned lender Bank Meill Iran is planning to expand its business in the United Arab Emirates, as the new CEO seeks to revive the bank.
This is part of an agreement between Bank Melli and the Central Bank of the United Arab Emirates to boost bilateral ties.
The agreement was reached during a meeting between Bank Melli CEO Abdolnaser Hemati and Emirati central bank governor Mubarak Al-Mansouri in Abu Dhabi, Fars news agency reported.
For his part, Al-Mansouri said that the Emirati central bank will help the Tehran-based lender to diversify and increase the activities of its branches in the UAE.
Bank Melli which is the largest commercial retail bank in Iran and the Middle East operates seven branches in the UAE.
Despite western sanctions on Iran’s banking sector over its nuclear energy program, Bank Melli has managed to provide “significant” services to its customers, especially Iranian businessmen and companies in the UAE, said Hemati.
Bank Melli’s CEO, who took office last year, has been trying to stabilize the bank’s position in Iran’s financial services sector. He is working to restructure the bank’s branches and operations. Also the lender is introducing more mobile banking solutions, to catch up with privately-owned banks that are at the forefront of e-banking.
Hemati recently called for change in the bank’s charter to allow more leeway in the bank’s operations. He criticized the parliament for the way it ratifies the bank’s budget, saying that it hinders the bank’s operations.
The lender’s financial health has been called into question due to the large amount of toxic debt on its balance sheet – a byproduct of state interference. The Central Bank of Iran is pushing Bank Melli along with other state-owned banks to offload their non-performing loans from their books to reinvigorate their status.
The bank handles most of the government’s financial transactions, including but not limited to taxes, fines, utility payments and government employee salary payments.
In addition to these problems, the bank is under sanctions that have cut the lender from foreign operations and reinsurance.
The United States imposed unilateral sanctions against Iranian banks, in Oct. 2007. Bank Melli was included on the sanctions list for allegedly providing financial services to Iran’s nuclear energy program. In a statement published on Bank Melli’s website, the bank refuted US allegations and categorically denied that it has ever been involved in any “deceptive banking practices”.
Iran is under the most stringent sanctions regime, imposed by the UN, US and the EU in an attempt to restrain its nuclear energy program. Iranian officials are now negotiating with representatives of the EU, US, Britain, France, Germany, China and Russia to work out a deal which would lead to the alleviation of these sanctions in exchange for Tehran limiting its nuclear program.
