EghtesadOnline: Austria’s Oberbank will sign a deal with Iran this month, enabling it to finance new ventures there, its chief executive said, among the first European lenders to do so since sanctions were eased.
The deal Tehran struck in 2015 with six major powers lifted many sanctions in exchange for restrictions on its nuclear activities and technically paved the way for international business deals with Iran.
However, many banks have stayed away for fear of inadvertently breaking remaining US sanctions, which could lead to huge fines, Financial Tribune reported.
Oberbank, Austria’s seventh-biggest lender, with a balance sheet of roughly €20 billion ($24 billion), is due to host a signing ceremony on Sept. 21 at its headquarters in the city of Linz with envoys from Iran’s central bank and Economy Ministry, its CEO Franz Gasselsberger said.
Executives from 10-12 Iranian banks will also be present for the signing of the agreement, which will enable Oberbank to provide credit for Austrian companies doing business in Iran, Gasselsberger told Reuters on Thursday.
“I think we are the first European bank (to reach such an agreement),” Gasselsberger said in a telephone interview, adding that he was relying on information from the Iranian authorities.
“Evidently, some Germans and Italians are also negotiating,” he said, adding that a Danish bank was also in talks. He declined to name any of those companies, but Denmark’s Danske Bank said in January that it was negotiating with Iran’s central bank.
The Oberbank agreement with Iran covers projects by Austrian companies in Iran lasting more than two years, in areas that were previously under sanctions.
“Oberbank already finances exports to Iran in areas such as food,” Gasselsberger said.
“We have very concrete projects in the fields of infrastructure, rail, health, hospital construction, factory building, photovoltaics, hydropower.”
Export credit guarantees covering 99% of a project’s volume will be provided by the Oesterreichische Kontrollbank, the main Austrian body that issues them.
“The sticking point was obtaining an additional guarantee from the Iranian republic,” Gasselsberger said. “We negotiated with the Iranian central bank but the guarantee is evidently coming from the Iranian Finance Ministry.”
Although President Hassan Rouhani cancelled a visit to Austria in March 2016, Iranian business executives went ahead with the trip and signed outline deals with Austrian exporters.