Page 43 - IRANRptJul22

8.1.5 Bank news
Russia’s Mir and Iran’s Shetab payment systems to be linked as Moscow, Tehran accelerate trade, investment ties
Iran’s central bank ‘okays opening of offshore bank to serve Kish Island Free Trade Zone’
State banks in Iran continue to cut costs by selling off branches surplus to requirements
Iran and Russia have struck a deal to connect their payment settlement systems—namely, Russia’s Mir and Iran’s Shetab—Russian Deputy Prime Minister Alexander Novak announced during a May 25 visit to Tehran.
There have been discussions for several years on the unification of Mir and Shetab as well as the operation of the countries’ national financial messaging systems. Those talks appear to have been accelerated given the onslaught of Western sanctions in response to Russia’s invasion of Ukraine that has forced Moscow to seek to quickly build up trade and investment links and opportunities across Asia.
“We’re on track to raise trade, economic, logistics, investment, financial, banking cooperation, despite the unprecedented pressure that Russia is experiencing,” Novak said at a meeting with businesses in Tehran, as reported by news service Interfax.
He added: “We are ready to continue the implementation of already-initiated projects and to launch new ones.”
The linking of Mir and Shetab would go some way to dismantling the international banking blockade that applies to Iran because of the effect of US sanctions.
“One of the key topics [in the negotiations] was the creation of conditions for mutual settlements and the passage of payments between our legal entities and organisations,” Novak added in Tehran.
“It is important that we have agreed to move as much as possible to settlements in national currencies. Together with the central banks, we discussed the distribution and operation of the financial messaging system, as well as the connection of Mir and Shetab payment cards,” Novak said. Russia’s central bank founded the Financial Message Transfer System (SPFS) in 2014. From the start, it was talked about as a replacement that could be turned to if Russian banks were disconnected from SWIFT, as they have been under the Ukraine sanctions.
Mir is so far accepted in 10 countries including Turkey (Is Bankasi, Ziraat Bankasi and Vakifbank banks), Vietnam, Armenia, Uzbekistan, Belarus, Kazakhstan, Kyrgyzstan and Tajikistan.
An offshore bank serving Iran’s Kish Island Free Trade Zone is to be opened following an approval granted by the Iranian central bank, according to the secretary of Iran's High Council of Free Trade Zones, as cited by ILNA.
"We have got permission from the central bank for launching Iran's first offshore bank on the island. The Central Bank of Iran has asked us to submit the list of shareholders of the bank," Saeid Mohammad was quoted as saying in an interview with the news agency.
A consortium of shareholders has been formed for the bank, but the names would not be published due to US economic sanctions and other restrictions, he was reported as adding.
State-owned Iranian banks are continuing with cost-cutting strategies that hinge on shutting down high street banks viewed as surplus to requirements, according to an economy ministry report cited by Donya-e Eqtesad.
Bank Melli Iran (MBI), Bank Mellat, Bank Sepah (sometimes wrongly associated with the Islamic Revolutionary Guard Corps, or IRGC) and Bank
43 IRAN Country Report July 2022 www.intellinews.com