17:06 GMT +316 November 2018
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    Russian Banks Race to Front of Queue to Enter Iran's Banking Sector

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    While the authorities in the US and EU continue to drag their feet on sanctions and hamper cooperation with Iran, Russian banks are keen to fill the gap in the opening Iranian market, Russian newspaper Izvestiya reported.

    Russian banks are striving to be the first in line after the partial lifting of sanctions against Iran, Russian newspaper Izvestiya reported on Wednesday.

    In January the US and EU announced the lifting of all economic and financial sanctions against the Islamic Republic associated with its nuclear program, enabling Tehran to access previously frozen assets, use international financial messaging services such as SWIFT, and sell oil and other raw materials to EU countries.

    Experts in the banking sector told the newspaper that while Western banks are waiting for guidance from the authorities on their prospects for cooperation with Iran, Russian banks are keen to get a head start.

    Russian banks do not currently have a presence in Iran, while a single Iranian bank operates in Russia, called "Mir Business Bank." The bank is a subsidiary of Bank Melli Iran and 70 percent of its customers import and export goods such as grain, timber and food products between Russia and Iran.

    "Iran is emerging from years of sanctions, the quality of banking services there has declined and Russian players can enter the market with interesting products for business and the public," said Anatoliy Aksanov of Russia's Association of Regional Banks.

    "It is obvious that the amount of trade between Russia and Iran is going to increase. It would be expedient to find a niche while there isn't stiff competition from other international organizations," Aksanov explained.

    "Our banks can start with servicing bilateral contracts with Iran, similar to Mir Business Bank. Then the volume of banking services can be extended, and if there is demand for them then smaller banks can enter the market," said Tamara Kasyanova of consulting firm 2K.

    A source in Russia's central bank told Izvestiya that it recently held talks with its Iranian counterpart to discuss cooperation in the financial sphere.

    "Russia and Iran are preparing to increase trade, so the question has arisen of closer cooperation with the central bank," the source said.

    In November last year Russia's trade representative in Iran Andrey Lugansky told Rossiyskaya Gazeta that Russia and Iran are discussing the creation of a joint clearing bank to enable the two countries to increase their trade. The volume of trade between the two countries was $5 billion in 2015, much of which took place through intermediaries such as Cyprus and the UAE, he said.

    By importing from countries to which Iran exports oil, such as China, South Korea, India and Japan, Russia's exporters should able to sell the technology Iran needs using those currencies rather than the dollar and euro, Lugansky explained.

    While Russian firms are keen to increase trade with Iran, their Western counterparts still appear fearful of repercussions from the authorities. 

    In March Iran's Supreme Leader Ayatollah Ali Khamenei told Iranian television that US authorities are dragging their feet on lifting sanctions, and that Iran's international financial transactions face problems because banks "fear the Americans."

    "The Americans have not acted on their promises and (only) removed the sanctions on paper," Khamenei said.

    While they have lifted some sanctions following the July 2015 nuclear agreement between Tehran and the 5+1 countries, the US and EU continue to impose some sanctions against Iran associated with its ballistic missile program, which Tehran maintains has purely defensive purposes.

    In July the US House of Representatives blocked a deal between Boeing and Iran Air to supply 118 passenger planes to replace Iran's ageing fleet. The move also prevents a similar deal between Iran Air and French manufacturer Airbus, since its planes use some parts from Boeing. The US representatives claimed Iran could modify the jets and use them for military purposes.

    Related:

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    economic cooperation, banking, sanctions, Iran, Russia
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