First Meeting of Association of Iranian Banks in Europe (Frankfurt) held in Iran

Karafarin Bank hosted the first meeting of Association of Iranian Banks in Europe (Frankfurt) which was held in Iran on Sunday 3 March 2019.

This meeting was attended by board members of this Association. Dr. Ghanbari as the CBI’s foreign currency credit manager, Dr. Divandari as the head of the Monetary and Banking Research Centre, Mr. Ali Majedi as economic expert and former ambassador of Iran in Germany and managing directors of private and public banks.
Membership of Iranian banks in the Association of Iranian Banks in Europe (Frankfurt)
Having thanked Karafarin Bank for hosting and the managing directors of private and public banks for attending this meeting Mr. Siavash Naghshineh, the chairman of the Association of Iranian Banks in Europe (Frankfurt) stated: ‘The main reason this meeting has been held is to become further familiar with the Association which is the first overseas association of Iranian banks and which will gain excellence by reviewing your support. I would like to point out that this association belongs to all banks regardless of whether they possess foreign branches or not. Hence, as members, your support shall strengthen this association.’
Having mentioned the number of Iranian branches within Europe, the Chairman of the Association continued: 18 branches are currently operating across 5 countries in Europe. They include Bank Melli Iran based in Hamburg, 6 independent banks, 11 branches and agents in England, Germany, France, Italy and Greece. Shareholders’ equity of these units amount to EUR2.2 billion. These experienced units have developed strong relations with their Iranian and European customers. Iranian domestic and overseas banks have unwantedly been dragged into politics at some point in time. Since this is beyond their control, their efforts in adapting themselves to the current conditions and in contributing to the development of economic sectors have been of little use. Furthermore, those countries engaged in full scale economic war against us (and they are not few for that matter) have targeted our banking system and have created many overseas financial and monetary problems for us. In fact, there is an increasingly widespread, organised discrediting of our banking system which is political in nature.
We accept that due to political reasons we have been pushed away from global standards. Although our condition has not been worst that many other banks in the region, they seem to have less problems in international arena. On the other, hand we have faced numerous challenges due to the aforementioned reason.” He stated.
He further continued: “It is noteworthy that although correspondent relations in 21st century are essentially different to those in the 20th century, yet we have to accept that segregation of our economic system prevents sustainable success in banking. Due to the vital importance of banks in Iran’s economy, our banks have been targeted in this economic war. The first measure taken in this regard was to exclude Iranian banks in the USD clearing system. This did not take place due to US political or economic power but it was due to the dependence of international monetary system on the US Dollar.”
“What do our units do in Europe where they do not face UN and European sanctions?” He asked. CBI and other Iranian banks proved their worthiness when facing other sanctions before the nuclear deal. They managed Iran’s overseas monetary transactions in spite of limitations. However, times are essentially different today and will be different in the future. During previous sanctions, (at high costs) we managed to answer to Iran’s needs. However, under current conditions Iranian banks are facing even more limitations internationally.
Pointing to problems aroused due to withdrawal of the USA from the nuclear deal, he stated: “We are in an economic war. We should cooperate with each other to overcome these conditions and to look ahead into the future. We have to keep ourselves safe wherever possible. This can only be achieved by being coordinated with international community and by taking advantage of a set of international regulations, behaviour and standards. Fortunately, Iranian banks are ready to equip themselves with the latest standards once political problems are overcome.”
Referring to INSTEX he continued: “This financial tool, which depends on management, scope of activity and means of application of an Iranian and a French authority shall undoubtedly open new avenues in the market. This financial tool can be very attractive to smaller businesses whilst medium sized and large companies are unlikely to be able to use it under current conditions except for cases when trading humanitarian related commodities. Creating an equilibrium between the value of purchased commodities and oil and non-oil commodities revenues are the positive aspects of this association, as far as the Islamic Republic of Iran is concerned.
Explaining the Formation of Association of Iranian Banks in Europe (Frankfurt)
Referring to the formation of Association of Iranian Banks in Europe (Frankfurt) Nader Maleki, deputy chairman of the mentioned association explained: This association was established in November 2017, in cooperation with some friends in the city of Frankfurt, Germany. One of the main objectives behind setting up this association was to ensure that Iranian banks in Europe have a homogenous and professional voice. In any case, it is difficult for Iranian banks to operate abroad independently. The sanctions enforced against Iran were not so severe when this association was registered and began operations. Today, cooperation between Iranian and European banks seems to be needed more than ever before in order to overcome the existing sanctions.”
Dr. Maleki added: Due to the membership of Karafarin Bank in this association and due to his experience in international affairs, we have asked Mr. Tehranfar to hold this meeting in Tehran at this time so that more banks in Iran can be affiliated with this association. Fortunately, Karafarin Bank has helped setup this meeting and I would like to take this opportunity to thank Mr. Tehranfar.”
Referring to the necessity of equipping Iranian bank with the latest global knowhow, he continued: “In order to prevent Iranian banks lag behind in the world and Europe, it is necessary to provide specialised and professional training remain up to date with the latest technologies. This association can pursue this goal.” He continued: “These congregations shall be held twice a year in order to achieve further coordination and cooperation between its members. In order to make it easier for directors of banks to attend these meetings we shall aim at holding at least one annual meeting in Iran and one in Germany. This way, we can receive assistance from the German government when it comes to achieving further cooperation with Iranian banks.
It is vitally important to strengthen links between Iranian and European banks and it is also important to invite European banks to Iran, because these interactions lead to joint ideas which may help to overcome challenges.” He added.

Necessity for Iranian and European Banks to a common voice
Having mentioned the difficulties and limitations faced by Iranian banks following the enforcement of US sanctions in November of current year, Hamid Tehranfar stated: “Following the abandoning of the nuclear dear via the USA, Europe proposed a solution termed SPV, under which, Iranian and European banks would be able to carry out their financial transactions. Later, INSTEX was implemented via SPV. This special company, INSTEX would provide a special financial tool for trading with Iran. The headquarters of this company is in France and its manager is an experienced German national. The UK plays an inspection and monitory role in reference to INSTEX. In fact, three important European Union member countries, ie. Germany, United Kingdom and France are seeking means of ensuring that financial transactions between Iran and other countries do not come to a standstill. INSTEX acts as an intermediary which settles the accounts of debtor and claimer companies.”
In any case, he continued: “Iranian banks are facing difficulties on the international arena, but they must nevertheless find a solution to conduct their international transactions. Even with the aid of INSTEX we shall still face numerous limitations in international transactions. Therefore, with rational decision making and determination we have to aim at reducing these limitations.
It is extremely important that Iranian banks have the same voice under current conditions. Iranian banks can make their suggestions to European banks via the Association of Iranian Banks in Europe (Frankfurt) in a coherent manner. If united, the voice of Iranian banks expressed through this association would undoubtedly be heard in Europe and this would lead to further cooperation and better solutions in international banking.”
Necessity to Increase the Number of Branches of Iranian Banks in Europe
Mr. Ali Majedi, an economic expert and the previous Iranian ambassador to Germany stressed upon the necessity to strengthen links between the Iranian Embassy and Iran’s economic sectors and authorities. “Germany believes that in order to boost interaction between Iranian and German banks, the number of Iranian bank branches in Europe should increase. This proposal was made before the exiting of USA from the nuclear deal.” He stated.
“In a meeting I had with the CBI chairman, I mentioned that two banks, namely: DZ and Volks Bank which have large structures and cover over 100 banks. In other words, they perform the task of a central bank for these 100 banks. Although these two banks do not directly deal with Iranian banks, some of their subsidiaries have announced their willingness to cooperate with Iranian banks. The German ambassador supports this cooperation under certain conditions. We need to support the development of these relations as a starting point to achieve greater cooperation.” He added.
The ex-Iranian ambassador the Germany stated: “In any case, although Iranian banks may not be able to directly and independently be engaged in this regard, the Association of Iranian Banks in Europe could carry out this duty on their behalf. Hence, this association should be supported and as your representative, I shall do my best in this regard.”
At the end of this meeting the managing directors of banks put forward their questions, made suggestions and discussed the field of activity of the Association of Iranian Banks in Europe.

Sep 15, 2019