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exporters they should wind up their deals with Islamic Republic by August 6. Earlier in May, Germany’s second largest lender DZ Bank said it would halt financial transactions with Iran in July. Meanwhile, Austria’s Oberbank on June 13 said it is to withdraw from Iran.
If there is an exodus by the very limited number of foreign banks that were willing to process transactions with Iran even before the Trump nuclear deal exit and sanctions announcement, it will come as a big blow to the country, particularly where trade finance is concerned.
8.2 Central Bank policy
Central of Bank of Iran looks to ease foreign bank operations in free trade zones
Iran updates foreign currency rules for travellers
The Central Bank of Iran (CBI) has agreed to ease the capital adequacy ratios of foreign banks operating in the country’s free trade zones (FTZs), Iran Student News Agency reported on June 2. To date, only a handful of foreign banks have created offshore branches in Iran’s FTZs. These include the partly Iranian-owned Europaisch-Iranische Handelsbank AG based in Tehran and Frankfurt, Standard Chartered which has operated an office in the Kish FTZ for more than a decade, Iran-Venezuela Bi-National Bank (soon to be called Iran-Latin America Bank), the Islamic Cooperation Investment Bank and Future Bank, the headquarters of which are based in Bahrain.
Morteza Bank, the secretary-general of Iran's High Council of Free Trade Zones, said that if foreign banks create operations in the FTZs, the minimum capital needed to create a branch would be reduced from the current €150mn, adding that “the figure [that will apply] is negotiable.”
“We must see [with the change in rules] which foreign banks would open in the free trade zones [around the country],” he said.
The amount of capital needed to create a bank in an Iranian FTZ was raised in 2017 from €25mn to €150mn. The move met with considerable opposition from several officials and financial experts. Their primary concern about the change was that the pace of investment would likely slow in the FTZs due to the added capital required.
Despite much optimism from the Rouhani administration in terms of the country's ability to attract foreign banks to set up operations in Iran, since the 2015 nuclear deal took effect in January 2016 only a handful of foreign banks have arrived in Tehran. But banks have operated for several years in the tax-free FTZs.
Banks like the United Arab Emirates’ NBD and Qatari banks have representative offices in Tehran. However, they do not publicise their presence to non-commercial customers.
The Central Bank of Iran (CBI) has announced a new set of updated rules for travellers entering and exiting the country, it said in a press release issued on May 13. Tehran has sought to clarify the new rules as part of an overhaul of foreign currency transactions since the run on the Iranian rial (IRR) that have taken the currency to a series of all-time unofficial lows.
The new rules stipulate that those leaving the country by air can carry a total of €5,000 or equivalent in other currencies, while those entering can also bring up to €5,000, down 50% on the previously stated limit, without declaring the sum to customs.
34 IRAN Country Report August 2018 www.intellinews.com