The Business Year

HE Dr. Majid Ghassemi

IRAN - Finance

All Bases Covered

CEO and Vice Chairman, Bank Pasargad

Bio

HE Dr. Majid Ghassemi established Bank Pasargad in 2005 and is currently the CEO and Vice-Chairman. Dr. Ghassemi is a former scholar of the Central Bank of Iran (CBI), receiving his MBA degree from Fairleigh Dickinson University in the US and a Phd in economics from the University of Southampton in the UK. In 1985, he was appointed as the CEO of Bank Melli before returning to CBI a year later in the capacity of Governor, a position that he held until 1989. He also served as First Deputy to the Minister of Energy and subsequently served as Chief Advisor to the Minister of Industries and Mines and held senior roles in Iran’s mining and metals industry. In 2012, Dr. Ghassemi was decorated with the European Union’s Medal of Honor with the rank “Chevalier.“

"A few of the large European banks have already visited us but have yet to establish full correspondent banking relations with our bank."

On the back of your experience as Governor of the Central Bank of Iran (CBI), what was the idea behind creating a private bank in 2005?

Pasargad is the most honored and respectful name in Iran, as it means the center of Iranians. Every single word in the bank has a special meaning and has been carefully selected. Before establishing Bank Pasargad in 2005, it took more than eight years to study how to set up a bank that could be different from other banks and respected by the people. At the time when I was the Governor of the CBI between 1986 and 1989, we had nine state-owned banks, and many entrepreneurs and investors in Iran were interested in establishing a private bank. The experience at the Central Bank helped me see all the strengths and weaknesses of the banking system. Being the CEO of Bank Melli was also a beneficial experience because state-owned banks work differently from private banks. Unlike many other banks, Bank Pasargad’s distinctive culture considers and treats all our employees as bankers.

How would you assess the rapid growth of the bank during its first decade?

I am pleased to state that we have achieved all of the goals and objectives foreseen in our original business plan with the exception of only one issue: our international expansion. From the outset, my main aim was to establish Iran’s first global bank. I foresee a day when Bank Pasargad shall be referred to as the premier bank and a benchmark in the Middle East. Without a doubt, we have the best human capital among all Iranian banks. This is why young people refer to Bank Pasargad as the Bank of Love. When we established the bank, the IPO sold out in two hours. On that day we had queues all night in front of the bank. Unfortunately because of the sanctions we were not able to realize our original business plan and become a global bank. However, as a result we concentrated our attention on our domestic network and became the fastest growing bank in Iran. In 2012, Bank Pasargad was recognized as the fastest-growing bank in the Middle East in terms of return on assets. Today, in terms of paid-up capital, Bank Pasargad is Iran’s largest private bank with $1.8 billion and we plan to double this amount, reaching a base capital of $4 billion within five years. We have been internationally recognized as Iran’s best bank, having received: the Bank of the Year Award by The Banker magazine in years 2010, 2012, 2013, 2014, and 2015; The Islamic Bank of the Year Award by The Banker magazine for four consecutive years over 2013, 2014, 2015, and 2016; and Euromoney’s Best Bank in Iran Award for two successive years in 2015 and 2016. Domestically, we have won the prestigious European Foundation for Quality Management (EFQM) Award and the Most Admired Knowledge Enterprise (MAKE) Award for four successive years, in2012, 2013, 2014, and 2015.

The bank plans to double its capital in the next five years. What is your strategy to meet this goal?

At Bank Pasargad we make things happen. We know what to do to achieve that goal and become a modern global bank. For this reason, being such a big bank with a capital adequacy ratio of 19% is very important. Today, as I stated previously, the paid-up capital of the bank is $1.8 billion, but the General Assembly has approved that this capital will be raised to $4 billion within a five-year period. This year alone we are going to increase our capital base by 20%. As we are going to expand internationally, we are going to need more capital to invest in the banks that we are going to establish abroad.

To what countries are you looking to expand?

At this stage, the corresponding relationship with foreign banks is of primary importance to us. However, premier European banks are still hesitant to resume relations, as they are looking for more clarifications and assurance by the US Treasury’s Office of Foreign Asset Control (OFAC). A few of the large European banks have already visited us but have yet to establish full correspondent banking relations with our bank. Generally speaking, due to our past success and market share in Iran, all foreign delegations visiting Iran come to meet us at Bank Pasargad. In parallel, we are keen to establish a presence in the countries that have a high level of trade volume with Iran, such as China, India, Turkey, and a number of European countries. As a base principal, Bank Pasargad shall develop its global expansion plan concurrent to Iran’s international level of trade and in the countries with which it trades. This expansion plan will be either through representative offices, branches, joint venture banks to be established with foreign local banks, or acquisitions. The choice will depend on the laws and regulations of each country. For instance, right now most countries prefer us to establish subsidiaries in order to give more supervisory power to the local regulatory authority. But, the natural and organic way for banks to grow internationally is through establishing a network composed of branches.

What is the role of private banks in promoting trade with Iran?

Having a high respect for state-owned banks, I must say that private banks have been quite successful in the country and have steadily gained market share from state-owned banks. Because of our superior level of service, our corporate culture, our dynamic decision-making process, and our more diversified financial products, people prefer to bank with Iran’s private banks. Today, private banks hold a 60% share of all deposits. Traditionally, Iranian private banks have handled a significant portion of the country’s trade volume mainly because of their well-trained staff and the high quality of their documentary credits. This has been recognized by all international banks. I personally believe that during this post-sanctions’ era, Iranian private banks will even gain more market share from state-owned banks because we will be able to truly compete and display our skills and expertise. I also foresee a market consolidation in the Iranian banking sector with considerable mergers and acquisition activity. There is an excellent opportunity for all foreign investors at this point to purchase the shares of Iran’s leading private banks.

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