PILLAR OF SUPPORT

Iran 2017 | FINANCE | INTERVIEW

TBY talks to Dr. Ali Salehabadi, Chairman & Managing Director of Export Development Bank of Iran (EDBI), on promoting local businesses, resuming relations with large global banks, and supporting the activities of exporters.

Dr. Ali Salehabadi
BIOGRAPHY
Dr. Ali Salehabadi was appointed Chairman & Managing Director of EDBI in 2015. Prior to that, he was Chairman and President of Securities and Exchange Organization of Iran from 2006 to 2015. He holds a PhD in finance from Tehran University. Dr. Salehabadi has published several scientific articles and analytic reports in domestic and international magazines.

How do you promote exports and enable investors and exporters through your services and activities?

EDBI is the export-import (EXIM) bank of Iran. EXIM banks around the world are typically state owned and this is the case with our bank as well. EDBI was established as a body of the Iranian government to promote exports and enhance economic relations between Iran and other countries. If Iranian companies want to participate in projects outside of Iran, we provide the financing to make this happen. The strengthening of activities of Iranian companies in the region is important to the Iranian government. We also provide working capital to Iranian exporters of commodities or goods, and to projects that are export oriented. We provide them the facilities they need in order to shape the required infrastructure for exporting from Iran. There is important infrastructure in Iran that we must support, such as Chabahar Port in the southeast, which is important for the commodities trade. We can also facilitate other countries such as Afghanistan and India trading through Chabahar Port or use it to connect to CIS countries. EDBI financed the expansion of Chabahar Port together with the EXIM bank in India. In addition to providing loans and credit facilities to companies and projects, we provide services to exporters and importers. These include letters of credit, letters of guarantee, and assistance with money transfers and opening accounts with foreign banks in order to receive the proceeds of exports in other countries. All these services are provided to both exporters and importers.

What has been the impact of the JCPOA on your operations?

After JCPOA, we were able to improve our relations with other banks. Currently we have around 120 corresponding banking relations. Before JCPOA, all our foreign accounts were blocked. We have since reconnected to SWIFT and can now exchange messages with our counterparts in different countries. We opened new accounts with different banks or reopened suspended accounts. We are now able to transfer money across the border, which is important as we can now take the proceeds of exports in different accounts. We can open and advise on letters of credit and can issue letters of guarantee and different facilities and services to other banks. One of the problems after the JCPOA is that we expected to reestablish correspondent banking relations with large banks like Deutsche Bank and Credit Suisse. However, they are still not ready to have corresponding banking relations with us. These are the limitations and obstacles we still face. There are some issues related to the readiness of the Iranian banking system in implementing international rules and regulations. The biggest obstacle, however, is the fear that institutions have of the Office of Foreign Assets Control (OFAC) of the US Department of Treasury. We have developed solid relations with many banks after the JCPOA and are waiting to reopen relations with large banks in order to provide better services to Iranian importers and exporters.

Why should Iranian exporters or foreign buyers look to EDBI as their banking partner?

Our services are focused on supporting exports, so exporters concentrate their banking activities in our bank. When we issue a letter of guarantee we take just 2% as cash and 98% through other forms of collateral, like a promissory note. This is a service that only we offer. We provide exporters with attractive loans as our goal is to support businesses. They come to us because of the preferable fees or rates that we provide them. EDBI is a development bank, and the nature of development banks is to take more risks. Since we are a state-owned bank, the government takes on this risk in order to support the exports of Iranian companies. This is completely different to the activities of commercial banks that are more conservative on this issue and less prone to taking risks.