"We have permission to open seven branches in Iraq…So far two are operating and if there is no major hurdle we will soon open five more," Kourosh Parvizian was quoted as saying by the chamber’s official website.
Parsian recently increased the capital of the operating branches in the neighboring Arab state to $50 million, he added.
Parvizian, who also is head of Iran's Private Banks and Credit Institutions Association, said his bank would be willing to form consortiums with other banks to finance non-oil exports to Iraq, Financial Tribune reported.
"We are working closely with the Export Guarantee Fund of Iran," he said, while outlining his bank’s plans to underwrite higher risks for exporters.
EGFI, a state-owned export credit agency, has been offering incentives to help boost trade between the two countries, like guarantees with 1% fee to exporters of non-oil goods to Iraq.
The fund has provided close to $3.5 billion in export guarantees for trade with Iraq in the past decade and paid $113 million in claims.
Parsian has one branch each in Baghdad and Najaf. Bank Melli Iran has three branches in Baghdad, Basra and Najaf.
The Problem
Opening more bank branches in the neighboring country could help address some challenges both countries face. Trade, energy and tourism are being negatively impacted by tough new restrictions imposed by the US on Iran.
Iran and Iraq plan to increase bilateral trade to $20 billion per annum within two years. Last year's (March 2018-19) data show 19.84 million tons of non-oil goods worth $9 billion were traded between the two sides to register 48.25% and 35.75% growth in volume and value respectively compared to the year before.
Exporters, however, are looking for a new channel to repatriate currency earnings. Negotiations are being held between high-ranking officials of the two countries to ease financial interaction mainly by ending use of the US dollar and replacing it with national currencies.
Commenting on the issue, Ali Salehabadi, CEO of Export Development Bank of Iran, noted that "transferring revenues back to the country has become a major concern for exporters…Iraq is a key market for us."
The banker noted that “new channels” are being studied to ease two-way trade, adding that the EDBI is ready to pay exporters in rials. He did not elaborate.
The concern is not limited to Iranian companies. Iraqi officials have often expressed reservations about conditions in their country as it relies largely on Iran for natural gas, electricity and assorted goods.
Iran exported 19.76 million tons of goods worth $8.9 billion to Iraq in the last fiscal year, marking 49.1% and 36.7% growth in volume and value respectively.
Iraq was Iran’s second export destination after China last year.