09 June 2008
The first branch of Iran-Europe Commercial Bank (EIH) in Tehran started operation on Wednesday, May 28th, 2008, in a ceremony attended by HE Dr. Mazaheri, the Honorable Governor of the Central Bank of Iran (CBI) as well as a group of ranking monetary and banking authorities of the country, the PR department of CBI reported today.
At his inaugural speech HE CBI Governor referred to the desirable atmosphere presently provided for the presence of foreign banks in Iran in the form of independent branches or joint partnerships with Iranian banks adding there is an abundance of lucrative investment opportunities in Iran, banking on which the foreign banks may take a lead in granting facilities and securing the liquidity needed by the country's industries thus setting a milestone in assisting the production trend and creating job opportunities in Iran. "Today we are facing a liquidity dilemma; excessive liquidity and liquidity growth in the economy on one hand, and lack of liquidity borne by manufacturing units of the country on the other", said HE Governor adding: "the liquidity resulting from economic activities of financial institutions could be counted in for economic growth and development which can be easily and smoothly directed towards manufacturing units consequently entering the country's economic cycle, while the liquidity arising from injection of hot money by the Central Bank causes inflation bringing disruption to economic equilibrium barring the flow of liquidity towards productive units." "That is why", HE Governor continued, "since late 2007 the injection of Central Bank hot money was restricted to prevent the ensuing negative effects; while at the same time a certain set of measures have been or will be implemented on a procedural basis in a bid to develop the monetary institutions to provide sound liquidity for productive units. Such measures include improvement of capital structure and financial composition of state-owned banks, development of private bank activities both in terms of geographical development and capital increase, as well as diversity of financial instruments. This trend will be pursued".
On bringing organization and order to financial and credit institutions operating outside the scope of CBI supervision, HE Governor asserted during the past months serious and effective measures were carried out to see the said institutions financially disciplined and to have their potentials tapped into.
Further in his remarks HE Governor elaborated on opening of Iran-Europe Commercial Bank's first branch in Tehran as a starting point for the latest measure taken by CBI in issuing the relevant banking license(s) and inviting foreign banks to maintain a presence in Iran through establishing independent banks or entering into partnerships with Iranian partners adding these banks may operate subject to full compliance of the prevailing monetary and banking laws of the country and the resources they bring in from their shareholders. "Foreign banks branches in Iran"' HE Governor underscored, "shall operate based on full observance of the Iranian banking regulations while upholding the standards and principles of their mother banks. Any granting of facilities, collecting of resources and rendering of banking services shall be conducted within this framework". "All legal obstacles pertaining to the above were removed during the past few months and since then on a number of foreign banks received the relevant permits for operation by submitting their applications. Once fully operational, these banks shall also go on stream", said HE Governor while stating that the operation of foreign banks not only produces significant return for them, but also provides the necessary credit and liquidity for the economic activities of the country. Moreover, the presence of foreign banks and utilization of the state-of-the art banking technology and know-how by these banks, shall pave the ground for development and competitiveness amongst private, state-owned and foreign banks, which in turn works toward the betterment of banking services qualities.