EghtesadOnline: Iran’s banking sector is pressing ahead with overseas business despite the shadow of sanctions’ revival looming over it, after the US unilaterally withdrew from the 2015 nuclear deal early this month, Bank Mellat CEO Mohammad Bigdeli said.
“Iran’s banking relations [with the world] and the operations of Iranian banks’ foreign branches are facing no particular problem after the US quit JCPOA,” Bigdeli said, while acknowledging that the prospects were bleak, IBENA reported on Wednesday.
“We are likely to face more problems in this regard in the coming months,” he added.
The CEO was using an abbreviation that stands for the Joint Comprehensive Plan of Action, the formal name of the multilateral agreement, according to Financial Tribune.
Bigdeli said the fate of Iran’s international banking relations are tied to the outcome of the negotiations underway with the European side.
“Foreign-based branches of Bank Mellat still remain active and offer services. If Europe stays in the JCPOA, the small banks involved with Iran will continue their cooperation. But if negotiations with Europe does not yield the intended results, it would be impossible to continue cooperation,” he said
“If the talks with Europe yield results, the banks’ operations would continue and allow the existing needs and problems to be addressed.”
It was negotiated with the six major powers, namely the US, Britain, France, Russia and China plus Germany, and laid time-bound constraints on Iran’s nuclear program in return for the EU and UN lifting their sanctions and the US suspending the application of its nuclear-related punitive measures.
But US non-nuclear sanctions remained in place to slow down a promised boon for the Iranian economy by scaring off foreign investors and making it difficult for Iranian banks to forge links with the outside world.
The situation has deteriorated following a controversial decision by US President Donald Trump to unilaterally pull out of the nuclear accord, calling it deeply flawed and vowing to reinstate nuclear sanctions.
However, European states have expressed their commitment to ensure Iran gets adequate economic benefits to persuade it to stay in the deal.
They have been in talks with Iranians to come up with solutions that would allow Tehran to maintain effective banking transactions and continue to sell its oil and gas products, while protecting European investments in Iran.
Highlighting just how difficult it will be, the US Treasury Department announced more sanctions on May 15, including on the Central Bank of Iran’s Governor Valiollah Seif to punish the bank’s role for funneling money on behalf of the Qods Force, the external arm of the Islamic Revolutionary Guards Corps, to Iran-backed resistance groups that Washington regards as terrorist.
IRGC’s regional role has been fiercely criticized by the US administration and was among the excuses cited by Trump for walking out of JCPOA.
Iran’s international banking activity was gradually picking up after the nuclear deal came into force in January 2016, with major Iranian banks, including Mellat, seeking to expand their overseas operations by opening new branches.
The removal of sanctions had allowed some of those foreign-based bank branches to join TARGET2, an interbank payment system for the real-time processing of cross-border transfers throughout the European Union.