AHEAD OF THE CURVE

Iran 2017 | FINANCE | INTERVIEW

TBY talks to Mostafa Beheshti Rouy, Member of the Board of Pasargad Bank, on its upcoming areas of focus, establishing new banking relationships, and being prepared for international reporting standards.

Mostafa Beheshti Rouy
BIOGRAPHY
Mostafa Beheshti Rouy started his career in 1971 and has gained invaluable experience since then. He worked at Bank Mellat, where he held several positions, the last as CEO of Bank Mellat Turkey. Prior to joining Bank Pasargad in 2005, he was Deputy CEO of Parsian Bank and Deputy CEO of Nargan Co., a prominent EPC company in Iran. Parallel to his banking career, he was also the founder and first CEO of Mellat Investment Company from 1991-1994, and has served as a board member of many industrial and IT companies in Iran. He has also lectured and conducted various courses in finance and banking at several Iranian universities.

In which banking segments do you see the potential to grow your market share?

We seek to change our operating model to become a fee-based bank by providing advisory and consultancy services to our clients, both corporate and individual. We particularly want to concentrate on asset and fund management, because now that Iranian entities can operate outside the country, there are many clients who want to hold their assets in a mix of currencies. We are working on business models for fee-based services for our clients. In addition, we concentrate on digital banking and IT. Pasargad Bank has been a pioneer in developing virtual banking in Iran and we continue to build on that. We are developing new applications, for example related to the Internet of Things (IoT). We are a technology-driven bank and seek to use the best technology available in order to provide good-quality services to our clients.

What is your evaluation of the re-entry of Iranian banks to the global financial arena?

Since the signing of the JCPOA and its implementation, Iranian banks have had positive experiences in establishing new correspondent banking relationships. However, large banks are not returning to Iran. The reason for this is that some of those banks have been fined by the US Office of Foreign Assets Control (OFAC) and are scared of incurring new kinds of penalties, even though all banking operations with Iran right now are fully legitimate and no longer under sanctions. One of the other major issues for overseas banks is the cost of compliance, which has created some hesitancy. Pasargad Bank has been able to establish around 60 new correspondent bank relationships since the signing of the JCPOA. We deal with trade finance transactions and open letters of credit for our clients all around the world with the exception of North America. Pasargad Bank also has a strict compliance policy and sanctions screening process that has been in place for seven years. We have a compliance sheet for every foreign transaction to ensure it is completely legitimate. We also open letters of credit under the ICC Uniform Customs and Practice for Documentary Credits (UCP 600), and all the information and documentation is provided to the advising and negotiating banks. We have seen many developments since the signing of JCPOA and expect to see more, including larger banks with a higher capacity, coming to the Iranian market. The issues that remain, which are outside the control of commercial banks, are likely those that need to be decided upon by entities such as the Central Bank of Iran. Iran is on the Financial Action Task Force's Gray List, and we would like to see the country come off that and get onto the White List. This would help us improve our relationships with our correspondent banks worldwide.

How do you reflect on Pasargad's Bank capital adequacy ratio and balance sheet?

Our capital adequacy ratio at Iranian YE (March 2017) is higher than the minimum recommended by Basel III. Furthermore, Pasargad Bank was one of the first to issue its accounts based on IFRS, and we did this within the required time frame under Iranian law. The Iranian regulations state that every company should hold their general assembly within four months of the end of the fiscal year. Only Pasargad Bank and one other bank were able to hold their general assembly and report under IFRS within this prescribed timeframe. The reason for this is that since its establishment Pasargad Bank has sought to be the first Iranian bank listed in the Fortune 500. We established our standards and internal processes in such a way that, when the sanctions were removed, we were already ahead in terms of our compliance and practices and in line with international standards. Even though we have been reporting according to Iranian financial standards, we have been preparing our accounts based on IFRS as well.