Three foreign banks are in the process of opening branches in Iran, the country’s vice central bank governor says.
This is good news for Iran which is still facing a drought of outside investment because major Western banks are reluctant to finance projects or process financial transactions with the country.
According to Central Bank of Iran Vice Governor Peyman Ghorbani, Oman’s Bank Muscat SAOG, Woori Bank of South Korea and India’s UCO Bank Ltd. are all in the process of establishing a presence in Tehran.
Iranian officials have said the US is “terrorizing" the Europeans into shunning business with Iran despite the lifting of sanctions under a landmark nuclear deal.
They say US officials are deliberately keeping the terms of engagement with Iran opaque as a result of which European banks and investors are not clear about how they can operate in Iran without falling foul of US law.
Central bank governor Valiollah Seif has said progress with foreign banks has been “slow”. Some European banks have reportedly discussed resumption of trade financing in Iran but they have yet to move in.
According to a Tuesday report, Greece has undertaken to rehabilitate Iran’s Bank Saderat, defying US sanctions and other countries in the European Union.
President Alexis Tsipras was among the first Western leaders to lead a big delegation of businesses to Tehran soon after the sanctions were lifted in mid-January 2016.
Greece’s largest refinery, Hellenic Petroleum, has resumed taking Iranian crude oil after repaying $548 million worth of debt it owed Iranian firms.
Other European leaders have also flocked to Tehran along with dozens of corporate executives but largest banks have refused to finance deals out of fear they could run afoul of US sanctions.
This situation has allowed smaller German banks to begin offering limited financing and payment services. Medium-sized banks are also showing a great deal of interest in Iran business but they are biding their time.
"The potential in Iran is enormous and the demand for export credit guarantees is high, both in terms of formal applications and expressions of interest," Reuters quoted Siegfried Utzig, acting head of economic policy and international affairs at the Association of German Banks (BvB), as saying on Tuesday.
He expected to see the first large-scale, credit-financed deals in 2017.
In June, the German government began offering export credit guarantees via insurance group Euler Hermes for firms wanting to trade with Iran.
Edna Schoene, head of German government business at Euler Hermes, said about 30 formal applications had been received since then with a total value of about 2.5 billion euros.
Nearly 70 non-binding letters of interest have also been issued, which pushed the total volume of commitments up into the double-digit billions of euros, she added.