EghtesadOnline: Iran intends to establish a joint bank to promote trade ties with Latin America by repurposing its only bi-national bank with that of another country from the region, the chief executive of Export Development Bank of Iran said.
“In light of our high trade deals with Latin American countries, we are negotiating with them, especially with Brazil, to turn the Iran-Venezuela Bi-National Bank into the Iran-Latin America Bank,” Ali Salehabadi was also quoted as saying by the website of EDBI.
The official, who was speaking at a press conference on Sunday, added that if the bank is successfully revamped, it can play a much more active and effective role in supporting private sector business.
Established in 2010, the bi-national bank’s mission aimed to boost commercial relations and investments between Iran and Latin American nations, but mostly focuses on Venezuela as its board of directors also consists of four Venezuelans in addition to four Iranians, according to Financial Tribune.
The name of the bank recently came up at the latest dialogue council between the government and private sector last Wednesday.
Head of Iran Chamber of Commerce, Industries, Mines and Agriculture Gholamhossein Shafei proposed at the meeting that the government and lawmakers create a rainy day fund for the private sector.
However, Minister of Economic Affairs and Finance Masoud Karbasian proposed that instead of establishing a new fund, a multilateral effort could change the statute of Iran-Venezuela Bi-National Bank to better assist the private sector.
Expanded Ties With Russia, Qatar
According to Salehabadi, after recent political tensions between Russia and Turkey, the former has become more eager to trade with Iran.
“Russian companies are now more inclined to supply their products to Iranian companies,” he said, adding that the Eximbank of Russia is eying improved ties with Iran, as banking and trade ties between the two nations stand at a good level.
“Russia boasts ample foreign exchange reserves and a major market, and we need to increase our share in this market.”
The Eximbank of Russia in late December signed a cap-less foreign finance deal with four Iranian banks, including EDBI.
Referring to the attractive market of Qatar, Salehabadi said his bank “is ready to offer loans with preferential interest rates of 11% to any real or legal persons looking to increase exports to this Arab nation”.
At Sunday’s press conference, the EDBI chief executive presented data about his bank’s performance in the current fiscal year that began in March 2017.
According to Salehabadi, the bank has doled out loans worth more than 58 trillion rials ($1.24 billion) so far, registering a 52% increase compared with the same period, whereas 75% of the facilities have been allocated as working capital.
The bank has more than 29 trillion rials ($623.6 million) in rial deposits and $2.3 billion in foreign exchange deposits, indicating a 72% and 58% increase respectively.
By the end of the 10th month of the current year on Jan. 20, EDBI had opened $900 million in letters of credit to show a 10% rise while its local LCs were valued at 3.04 trillion rials ($65.3 million), marking a 45% hike compared with the same period of last year.
According to Salehabadi, the payment orders issued by the bank also increased by 80% in the same period to stand at $5.057 billion and the value of its rial and foreign exchange guarantees stood at 2.41 trillion rials ($51.8 million) and $32 million to indicate a respective rise of 24% and 40%.
The bank chief pointed out that EDBI’s rating is BB- while the government’s support rating for the bank has improved to 2 from the previous 4, which he puts down to EDBI’s capital being increased to 35 trillion rials ($752.6 million) from the previous 25 trillion rials ($537.6 million) and to the National Development Fund of Iran bestowing it with 1 trillion rials ($21.5 million) in resources with the aim of financing development projects.
On foreign correspondent relations, Salehabadi said his bank is currently in contact with 132 banks and has 38 bank accounts in several currencies.
“Seventy-one of those banks are in Europe, 47 are in Asia, 12 are in Africa and two are in Latin America,” he said, pointing out that EDBI intends to connect more with African banks this year where Iranian companies currently have several projects underway.
He then pointed to Iran’s several successful foreign finance deals this year, including those with South Korea, China, Austria and Russia.
“In addition to finance lines, we have also had refinance lines, namely $100 million with the Korea Export–Import Bank, $25 million with Tejarat Bank’s Paris branch and $25 million with Turkey’s ECO Trade and Development Bank,” he said.
Salehabadi said EDBI is currently in negotiations with the Europäisch-Iranische Handelsbank AG and the Hungarian Export-Import Bank for refinance agreements.