Recommencement of activities of foreign banks in Iran could help develop the monetary and fiscal system. If we accept money to be a product and competition in offering services in the market as a crucial move which can improve the banking sector, then the return of foreign banks should be seen in a positive light.
Entry of foreign banks on the domestic economic scene, in particular when the country is facing sanctions and mounting pressure from hostile powers is, inter alia, aimed at reducing problems and facilitating services demanded by industrialists and businesses alike.
It is clear that backing and facilitating the activities of the newcomer since the past three decades can and should encourage other banking and financial institutions to do likewise.
The Irano-European Commercial Bank, which made its debut yesterday, is the first foreign bank to set up office in Tehran after the victory of the Islamic Revolution in 1979. This move is important for improving and shaking the normally lethargic national banking sector.
But it is worth mentioning that the development should be navigated in a manner that makes room for and attracts the interest of other major international monetary bodies.
Economic officials are indeed obliged to help expedite this trend. The country’s fiscal and monetary system could do well to interact with its international peers in the larger interest of the nation and its economic progress.
It is reported that the Irano-European Commercial Bank operates on the basis of European supervisory regulations and can make easier the task of opening letters of credit, issuing forex guarantees, import/export, economic interaction with the outside world ... .
With modern banking tools and procuring the finances needed for major domestic projects, the bank can also function as a consultant to Iranian and European businesses and investors. Among other activities of the bank, reference can be made to opening savings and checking accounts, issuing credit cards, hard currency transactions, facilities for purchasing stocks in international bourses and managing liquidity of financial resources.
The new foreign bank, in which Iran’s Bank of Industries and Mines is the main shareholder, handled over six billion euros of L/Cs in 2007. Given the scale and scope of our banking operations, the profit charged on the said amount almost doubled compared to 2006. The bank had a profitable year in 2007 and was ranked 86th among over 2,000 financial institutions in Germany.
Our banking system was far and apart from constructive interaction with the international financial community in wake of developments that took place after the monarch was toppled thirty years ago.
This is while unhelpful and overt interference of successive governments in the banking sector in fact created major hurdles for domestic banks and prevented them from emerging as powerful economic institutions. Healthy competition between local and foreign banks can and will help the former overcome their weaknesses and positively affect the national economy.