Banking Reconnection Follows Nuclear Deal

EghtesadOnline: Iran's Ministry of Economic Affairs and Finance has published a report detailing the performance of seven Iranian banks in the area of correspondent relations, indicating that the international banking system is gradually warming up to reestablishing ties with the country.

News ID: ۷۴۱۱۸۶

26 April 2017

In its report, the ministry outlines the performance of Bank Melli, Bank Keshavarzi, Bank of Industry and Mine, Export Development Bank of Iran, Tejarat Bank, Bank Maskan and Bank Mellat. They have all managed to reconnect with banks of several countries following the easing of sanctions since the implementation of the nuclear accord named Joint Comprehensive Plan of Action on Jan. 16, 2016.

According to the Economy Ministry, from the implementation day till Sept. 21, 2016, Bank Melli established 25 correspondent relations with 25 foreign banks. By the end of the previous fiscal year (March 20, 2016), the bank managed to establish ties with 30 banks and had ongoing negotiations with an additional 110 banks.

"The number of meetings and negotiations with foreign banks has been on the rise in the past few months and the level of banks looking to establish correspondent relations has moved from mid-tier to relatively bigger banks, which indicates a positive outlook for the next year," Mohammad Reza Hosseinzadeh told Shada, the official news service of the Economy Ministry.

According to Financial Tribune, he added that the election of Donald Trump as US president initially made a number of banks wary of reconnecting with Iran, "but their doubts have since paled significantly".

Bank Keshavarzi's correspondent relations had dwindled to eight about four years ago at the height of the sanctions, but rose to 50 in the following year. The agent bank of the agriculture industry increased that figure to 99 by the end of last year. During 2013-15, the ministry reports, the Bank of Industry and Mine only had correspondent relations with three Chinese, Iraqi and Russian banks. The number of BIM's foreign correspondent banks reached 75 by the end of the previous year, including with lenders from Germany, Italy, Spain, France, the UK, China, Switzerland and Russia.

Considerable Increase

The Economy Ministry notes that the Export Development Bank of Iran has made "significant achievements", as the bank's correspondent relations spiked from only six banks under the intensified pressure of international sanctions to 75 banks by the start of the second half of the previous fiscal year in September.

Tejarat Bank counted only one correspondent bank on its list when sanctions were at their worst, "but from February 2016 until Sept. 20, 2016, it succeeded in establishing ties with 65 active correspondents".

Before the implementation of the nuclear accord, Bank Maskan's correspondent relations were limited to five banks, one each from Turkey, China, South Korea, Japan and the UAE. However, the agent bank of the housing sector established ties with 11 banks of Germany, Spain, Belgium, Austria, Switzerland and Thailand after JCPOA and "estimates of the bank show that the number of its correspondent relations reached 15 by March 2017".

Bank Mellat had only 12 correspondent relations at the onset of the sanctions-era and as a result of its disconnection with SWIFT interbank network, but the figure increased to 45 by the time sanctions were being lifted.