Bank of China Eying Iran Entry

EghtesadOnline: The chief executive of one of the oldest and most powerful Chinese banks has expressed willingness to enter Iran and open a representative office.

News ID: ۷۳۷۷۹۶

31 October 2016

Chen Siqing, CEO of Bank of China, made the announcement during a joint meeting with the Central Bank of Iran Governor Valiollah Seif.

"The goal of this meeting is expansion of financial cooperation between Iran and China and to develop joint efforts. We are looking to open a representative office in Iran," Chen was quoted as saying by the official website of CBI.

"In the next step, we can start thinking about opening branches," he added.

Noting that amplifying collaborations by the two countries will be in the interest of both sides, the BOC chief said economic potentials of Iran and China create a suitable backdrop to expand banking cooperation and "that is the goal we pursue".

"Iran is a big country with a high population and a strong economy," he said. "Therefore, Bank of China's presence in the country will bring about many positive outcomes."

Founded in 1912, Bank of China is the oldest bank in mainland China. The bank has 18 trillion yuans worth of assets, which place it among the top 10 banks in the world, as well as making it the most important international bank of the country.

Chen acknowledged CBI's support for having a Bank of China branch and representative office in Iran, adding that the establishment of correspondent relations could be a prelude for opening a branch in the country.

"In this regard, we must adhere to international standards," he said.

Seif called Iran-China ties "strategic and longstanding", saying Iran has always counted China among its strategic partners.

Pointing to the Chinese president's visit to Iran, he reiterated that expansion of economic collaborations was stressed in the visit and that "banking relations are a prerequisite to expanding these efforts".

Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei received Xi Jinping in late January in a meeting that was focused on boosting bilateral ties and issues of mutual interest, including the campaign against extremists and terrorists.

Cordial Ties

Referring to P5+1 countries that negotiated the Iran nuclear deal, Seif criticized the approach employed by the United States, but noted that in the group, China has had the closest ties with Iran and is therefore most accustomed to it.

Seif, who also heads the Money and Credit Council, reacted positively to the opening of a BOC office in Iran and said it could provide clear and transparent information about potential risks exerted on Iran's market and economy, reports Financial Tribune.

"Considering our aversion toward using the US dollar in international deals, our needs are met by paying for the imported goods through our oil or non-oil exports," he said.

"We will reimburse the surplus with a third-party currency that is usually the euro and our approach toward China is the same."

To support Chinese companies already active in Iran, he suggested having suitable correspondent relations in place.

"It is our proposal that to start working with Bank of China, the CBI and Iranian state-owned banks open correspondent accounts with the bank," he said.

At a separate meeting held with the Chinese delegation, Deputy Economy Minister Hossein Qazavi said that in order to increase the volume of banking and business deals with Iran, China should first coordinate with the CBI and after signing a deal with the top monetary authority, start dealing with commercial and specialized Iranian banks under the supervision of the central bank.

"The Export Development Bank of Iran has a structure that is more suited to jumpstart dealings between Bank of China and Iranian banks because of its specialized and government-owned status," he said. "The bank offers a variety of services and has a good track record in international deals."

The first step, according to the deputy minister, is establishing short-term credits that have a shorter process and need no guarantees.

"Your foreign credit will be used in various Iranian projects depending on how you wish to employ it," Qazavi promised the Chinese delegation.