Iran Signs First Deals with EU Banks
For the first time since sanctions were removed in January 2016, European banks have opened credit lines to Iran.
Iranian commercial banks have signed contracts for credit lines with Austria’s Oberbank and Denmark’s Danske Bank, authorities in Tehran said September 22.
Confirming Oberbank’s €1bn letter of credit with 14 Iranian banks on Sep.21, Helmut Edlbauer, the Austrian bank's head of global financial markets, told NGW that its agreement does not define a specific volume and the final amount is based on the needs of Austrian exporters: “The agreement makes it possible to realise strategically important projects in Iran and creates a competitive advantage for Austrian exporters. And it is only for Austrian exporters, because it is to be supported by Austrian export credit bank OeKB.”
The credit lines can be used to fund infrastructure projects, such as railway expansion, hydro-power and other renewable energy plants, hospitals, and machinery to support job creation in Iran.
Danske Bank said it had signed a framework agreement for trade financing of its customers, including in the energy sector. According to the Central Bank of Iran’s website, Danske Bank agreed to provide a €0.5bn credit line to ten Iranian banks September 22 towards construction projects.
Iran’s government-owned Bank of Industry and Mines (BIM), which signed the contract with both European banks, also said that Oberbank would finance 85% of Austrian exports to Iran by opening a credit line.
Russia’s state-run Vnesheconombank (VEB) recently signed an agreement with BIM Sep.12 for a loan to help build a €1.2bn ($1.4bn) 1.4 gigawatt gas-fired power plant at Sirik in Hormozgan province, southern Iran.
EU exports to Iran increased by 34% year-on-year to above $4bn in the first five months of current Iranian fiscal year which started March 21, data from Iran's Customs Administration indicate. Although Iran’s non-oil exports to the EU declined by 25% to $521mn in the same period (March 21-August 22), oil exports to the EU increased.
EU halted its Iranian oil intake in 2012 due to sanctions, but during post-sanctions era has gradually resumed these and during recent months they peaked at 700,000 b/d, or roughly at pre-sanctions level.
Dalga Khatinoglu