The Central Bank of Iran signaled its interest in allowing foreign banks and financial institutions to team up with Iranian banks, showing a change in the bank’s past attitude.
Iran’s financial sector offers opportunities for cooperation between domestic banks and foreign investors, CBI’s Deputy Governor Akbar Komijani said on Thursday, Reuters reported.
“Iran is enjoying a very vastly developed banking sector … There is plenty of room for cooperation, with joint ventures between foreign investors and Iranian partners,” Komijani said at a conference promoting trade between the European Union and Iran.
“E-banking has grown very much, but there is still a good opportunity to start business together in that area,” he added.
Iranian officials hope to not only reestablish ties with foreign banks—after the historic deal between Iran and the UN Security Council goes into force, lifting sanctions in exchange for limits on Tehran’s nuclear energy program—but also get foreign banks to enter Iran, increasing competition and efficiency in the banking system.
The central bank’s change in attitude comes after decades of opposition to foreign business.
Frozen Funds to Fund Investments
The nuclear deal will also allow Iran to access its frozen overseas assets. How the funds will be managed has been a matter of debate. Due to their sheer size, almost a third of GDP, the funds could considerably boost Iranian economic growth.
Iran will use funds unfrozen by its nuclear deal with world powers mainly to finance domestic investments, keeping the money abroad until it is needed, Komijani said.
“Those funds will be used primarily for the financing of investments, and they will be kept in the central bank account in foreign countries,” he told the conference in Vienna.
Under the deal, Iran will gain access to assets frozen abroad by sanctions; the money may become available around the end of this year, after Tehran is certified to be in compliance with the agreement, analysts believe.
US officials have said Iran will obtain access to over $100 billion of frozen assets, but Komijani said only about $29 billion were blocked, of which $23 billion belonged to the central bank as international reserves and $6 billion, mainly the proceeds of oil sales, belonged to the government.
Most of the $100 billion is already being used by Iran’s oil, petrochemical and gas industries, and to finance nearly 60 investment projects through the Chinese government, Komijani added without elaborating.
He said Iranian authorities had given the issue of how to hold and manage unfrozen funds to the central bank to decide.
Keeping some of the money temporarily in accounts abroad, instead of bringing it back to Iran as soon as it became available, could be seen by foreign governments as a vote of confidence to the nuclear agreement.
The frozen funds will be invested in petrochemical, natural gas, mining, roads and construction industries, Komijani said.