Bank Day Expanding Foreign Correspondent Relations

Following the implementation of the Joint Comprehensive Plan of Action (the formal name of Iran’s nuclear accord with world powers) that helped Iran’s banking system resume correspondent relations with foreign lenders, Bank Day has taken measures to make the most of this opportunity, the bank’s CEO announced.

“We have started to devise our financial statements in line with the standards of the International Financial Reporting System and also managed to acquire certificates for foreign exchange activities from the Central Bank of Iran,” Mohammad Reza Qorbani was also quoted as saying by IBENA.

He added that Bank Day is currently negotiating to get a third license from CBI to expand its correspondent relations with foreign lenders.

“After acquiring the third license from CBI, we have planned to establish correspondent ties with 23 foreign banks, including BCP Bank (Swiss), Bank of Kunlun (China), Bank Muscat (Oman), Kont Bank (Tajikistan), Europaisch-Iranische Handelsbank AG (Germany), IDBI Bank (India), Banca Carige (Italy), Economy Bank for Investment and Finance (Iraq) and Aktif Bank (Turkey),” Qorbani said.

The official noted that Bank Day is planning to change the approach of its income structure about which the bank has conducted a series of studies.

“With regard to the country’s economic environment and banks’ capabilities, we decided to shift our income structure from loans’ interests to banking services fees that require infrastructures and new policies,” he said.

Qorbani called for attracting cheap resources as a way for banks to increase their profitability.

“When a bank has access to cheap resources, it can increase the volume of its allocated loans that can have further profits for the bank. This is while the bank’s shareholders will also receive bigger dividends,” he said.

The Bank Day chief hailed CBI’s move to cut the interest rate on bank deposits, saying that the measure has calmed the monetary market and eliminated the unhealthy competition of banks for attracting more savings.

As per CBI’s directive, banks and credit institutions were obligated to refrain from paying high interests–that went up to 23%–after Sept. 2, and cap their interests on one-year deposits at the previously set 15% while paying a maximum interest of 10% to short-term deposits.

Qorbani denied that cutting banks’ interest rates has inflationary effects on gold, forex and housing markets, noting that even if liquidity were to flow into those sectors, it will ultimately find its way back to the banks.