Mir Business to Fast Track Iran-Russia Banking Ties

EghtesadOnline: As lackluster banking relations have hampered Iran’s economic prospects despite the lifting of sanctions after the implementation of the 2016 nuclear deal, it looks like the country’s ties with Russia and banking links are expanding.

News ID: ۷۸۱۹۶۸

03 March 2018

Mir Business Bank, the Russia-based subsidiary of Bank Melli Iran, is also to play an instrumental role in the expansion of Iran-Russia banking relations.

Representatives of the Iran-Russia Chamber of Commerce on Monday met with Mir Business Bank’s CEO Mohammad Hazzar to discuss the facilitation of Russian ties through the bank, the official news portal of Iran Chamber of Commerce, Industries, Mines and Agriculture reported.

Asadollah Asgaroladi, chairman of IRCC, called for a faster transfer of money between the two countries and said boosting banking ties between Iran and Russia would act as a very important factor in strengthening trade ties, according to Financial Tribune.

According to Asgaroladi, a joint commission will be held in Moscow between the two countries in the coming days, in which IRCC will discuss the removal of any barriers to Iran-Russia trade ties.

Qadir Qiafeh, deputy chairman of IRCC, said he is pleased with the pace of progress in money transfer between the two countries during the past few months.

“The emphasis of Russian officials on expanding Iran-Russia relations, especially trade and banking ties, has prompted Sberbank, which is Russia’s biggest bank, to facilitate the process of trade transactions as it has correspondent relations with MBB,” he saied.

The official stressed that “any transfer of money is conditioned to fully adhering to international anti-money laundering regulations”, but also said Russia’s current supervisory regulations allow for banking transactions to take place on a trustworthy platform and “away from illogical political pressures”.

The fact that Iran operates two foreign exchange rates was referred to by Qiafeh as a major problem for exporters and importers, which leads to increased prices for goods and less competition.

The official had recently spoken with Exim News and said sidelining the US dollar in Iran’s international transactions such as with Russia and China–a hot-button topic at present–will favor Iran’s economy.

“I believe that 25-30% of all the deals of these countries with Iran be conducted using national currencies, but altogether removing the USD from the transactions is not possible at present just as fully employing national currencies in deals is not possible in the short term and under the current conditions,” he had said.

Qiafeh added that the ever-increasing use of national currencies in bilateral and multilateral deals will lessen Iran’s dependency on the US currency.

In Monday’s meeting, MBB’s chief executive said the bank, established in Russia in 2002, currently has more than $100 million in capital and the highest share of Iran-Russia trade money goes through it.

“Facilitating financial and trade transactions between the two countries is the main mission of MBB,” he said, adding that Russia is the only country to have reestablished banking relations with Iranian counterparts using its major banks.

He also said if MBB is connected to the Russian banking system, all services of Russian banks using ruble and euro will be possible, in addition to the access that will be granted to Iran by Central Asian states, many of which also use ruble and euro in their transactions.

As Hazzar said, MBB currently offers two ways of interbank transactions with Iran: one using currencies such as USD, ruble and euro, and the other entails MBB receiving currencies in Russia and offering the rial equivalent to Iranian exporters based on Tehran’s free market rates.

A board member of Bank Melli had announced in late January that the bank is planning to establish an MBB branch in Iran, as the presence of a foreign bank branch inside the country could facilitate the transactions of investors, exporters and importers.