The Business Year

Dr Ali Salehabadi

IRAN - Finance

Chabahar Port and infrastructure key to increasing exports

Chairman and Managing Director, Export Development Bank of Iran


Dr. Ali Salehabadi was appointed as Chairman and Managing Director of Export Development Bank of Iran since 2015. Prior to working for EDBI, 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. He has published many scientific articles and analytic reports in domestic and international magazines.

“The strengthening of activities of Iranian companies in the region is important to the Iranian government.“

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 the 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. We finance these projects as exporting services to other countries, especially neighboring countries. 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 are important infrastructures 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 take 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 the JCPOA we were able to improve our relations with other banks. Right now we have around 120 corresponding banking relations. Before the JCPOA, all our foreign accounts were blocked. After the JCPOA we 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, despite of the lifting of sanctions, they are 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.

How do you assess the efforts taken by the Central Bank of Iran to implement Basel II and III standards in the banking system?

After the JCPOA, the Central Bank has focused on upgrading the working standards of the Iranian banks to international standards. The first step was implementing IFRS accounting standards. Since last year all banks have been forced by the Central Bank of Iran to issue their financial statements based on IFRS. This year there is a focus on increasing transparency and upgrading disclosure items in financial statements. These are important steps, as when we want to work with banks around the world, they want to know more about our financial condition. They want to see transparency, disclosure, and information on the structure of the bank and the assets, and the abilities and issues available in the bank. The next step is the capital requirement, which involves upgrading the standards of capital issues of Iranian banks in order to fulfill the Basel II or III requirements. In 2016 and 2017, our bank increased its capital by around USD300 million through the Iranian government. Following a law passed by the Iranian parliament, most state-owned banks received a capital increase, which is another important step in order to fulfill the Basel II and III requirements. EDBI was the first bank to fulfill the Basel II and III requirements in terms of capital. Our capital adequacy ratio was around 20%, and after this capital increase it increased to more than 25%, so we fulfilled the Basel III requirements for capital issues and other Iranian banks have done as well. All banks must have a rules and compliance department and an anti-money laundering department in order to fulfill the international standards. After the JCPOA, most—if not all—Iranian banks have upgraded their compatibility with international standards in terms of anti-money laundering and compliance issues.

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.

How can EDBI foster its position as the bank of choice for Iranian exporters?

Iran places some proceeds from the sale of crude oil to other countries into the National Development Fund of Iran. The size of this fund exceeds USD50 billion. Part of this money is deposited with our bank in order to support exporters through loans or credit facilities, which allows us to pursue our supportive goals. We have around 40 branches in all provinces of Iran and our personnel is highly educated to provide financial advice to Iranian importers and exporters. We have great relationships with our clients and always take suggestions and recommendations from them in order to further upgrade our services.



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