Oberbank settles in Iran, other banks expected to follow

Business Materials 22 September 2017 17:16 (UTC +04:00)

Tehran, Iran, September 22

By Mehdi Sepahvand –- Trend:

A senior Iranian banker believes that Oberbank’s deal to finance projects in Iran renders a “positive and constructive” turning point in Iran’s banking ties with other countries.

Oberbank (OBER.VI) on Thursday said it had signed a one-billion-euro deal with Iran, enabling it to finance new ventures there and making it one of the first European banks to do so since sanctions on Iran were eased in 2016.

“This will encourage more banks, the rather bigger and more conservative banks, also to attempt strengthening ties with Iran,” Bahaoddin Hosseini Hashemi, former president of Sarmayeh Bank, told Trend September 22.

The nuclear deal Iran struck in 2015 with six major powers lifted many sanctions against the country in exchange for restrictions on its nuclear activities and paved the way for international business deals.

But many banks have stayed away for fear of inadvertently breaking remaining U.S. sanctions, which could lead to huge fines.

“The world has realized the economic importance of Iran, as the 19th biggest economy in the world, with high national payment power, low debt-to-GDP ratio, and rich energy resources,” Hashemi noted.

Oberbank’s President Franz Gasselsberger said after signing the deal that Iran’s economy is attractive to Austria and the world in general, adding that Iran has all that is needed for it to turn into a leading economy.

He also explained that the deal will cover development projects in areas of health and infrastructure, among others.

U.S. President Donald Trump has created new uncertainties over the U.S. stance toward the Iran nuclear agreement. Trump told reporters this week he had made a decision on what to do about the agreement but would not say what he had decided.

Oberbank, Austria’s seventh-biggest bank, with a balance sheet of roughly 20 billion euros ($24 billion), signed the deal at its headquarters in Linz along with representatives from Iran’s central bank and the Finance Ministry.

Oberbank’s agreement with Iran covers projects by Austrian companies in Iran lasting more than two years in areas that were previously under sanctions. Oberbank already finances exports to Iran in areas such as food.