Iran is set to re-engage with the banking world within weeks as international lenders link up with their Iranian counterparts using international transaction network Society for the Worldwide Interbank Financial Telecommunications (SWIFT), Iranian Middle East Bank and a senior central bank official said on Friday.
A nuclear deal between world powers and Iran led to the removal of the curbs on Tehran’s banking, insurance and shipping sectors last weekend, as well as restrictions on oil exports.
However, for Iran to resume business with the international banking world — for the first time since 2012 — its banks need to be linked to overseas lenders on SWIFT. The SWIFT system is used to transmit payments and letters of credit.
“We have sent almost 40 SWIFTs to different banks around the world and we have requested that now that the sanctions are lifted, we would like to exchange documents and whether they will consider a correspondent banking relationship,” Middle East Bank chief executive and managing director Parviz Aghili said. “Some of them have come back and have asked for various questions, for documents they need.”
“My feeling is it is going to take a couple of weeks or so before we start to see proper re-engagement. It will be slowly, slowly,” he said in an interview.
Aghili said other Iranian banks were in the same situation regarding SWIFT as his company, which is listed on the Tehran Stock Exchange and has total assets of about US$1 billion.
A senior official with the Iranian central bank said the transaction links would soon be restored.
“Really, it is a matter of just a few weeks, less than a month. Because all of our banks, whether private or state-owned banks, have taken the necessary bureaucratic steps, regarding rejoining the SWIFT system,” the official said on Friday.
SWIFT did not respond to a request for comment on the status of communication between Iranian and international banks on its system.
Middle East Bank, which is smaller than state-owned players such as Bank Melli, Bank Mellat and Bank Saderat, is owned by investors including small and medium-sized Iranian firms.
While international banks are expected to link up with their Iranian counterparts via SWIFT, Iran would also be looking to encourage foreign institutions to expand involvement in the nation’s financial system.
However, for many foreign banks, there are concerns about being caught up in ongoing US sanctions.
Many international sanctions relating to Iran's nuclear program were lifted, but most involving US measures remain in place. Non-US banks might trade with Iran without fear of punishment in the US, but US banks might not do so, directly or indirectly.
The Iranian central bank official said banks from European nations, including Germany, France, Britain and Italy, had been in talks to open branches after the lifting of sanctions.
“God willing, soon we will witness that too. Iran is a very attractive market for business and they know that,” the official said.
By contrast, Aghili said he expected larger banks to wait at least six to 12 months before they would look at doing serious business in the nation.
'The smaller banks who do not have that involvement in the US market will be prepared to work with Iranian banks,' Aghili said. “But even these smaller banks expect proper anti-money laundering checks and they have to check it and they will also require counter-parties to check it.”
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