Iran's Central Bank Announces Signing of First 'Banking Contracts' with European Banks

The Central Bank of Iran reported that the first contract for opening a banking credit line (LC) with Austria's 'Oberbank' for one billion euros, and the second financing contract with Denmark's 'Danske Bank' for 500 million euros have been signed. According to the Central Bank's website, this is the first time since the JCPOA that European banks have signed a banking credit line contract with Iran. The official website of the Central Bank of Iran reported that the Oberbank contract was signed with 14 Iranian banks, and the Danske Bank contract was signed with 10 Iranian banks. Helmut Edlbau, head of international financial markets at Oberbank, confirmed in an interview with Radio Farda that the amount of the credit line is unspecified and depends on the volume of exports and the needs of Austrian companies. Mr. Edlbau added that 'this contract is aimed at realizing important strategic projects in Iran and assisting Austrian exporters to enter this market, and only Austrian companies can benefit from these facilities.' According to this Oberbank official, the projects for which the credit line will be opened include 'infrastructure projects such as railways, hydropower plants, clean energy production projects, health and wellness projects, and ultimately engineering projects,' the last of which is primarily aimed at job creation in Iran. The Iranian Industry and Mine Bank, which signed contracts with both banks, reported on its official website that 'Oberbank Austria finances 85% of the value of goods and services provided by Austrian sellers to Iranian buyers.' Danske Bank also confirmed to Radio Farda that what has been signed is not a contract but rather a structural agreement. This Danish bank noted that this memorandum is aimed not only at financing the commercial needs of clients but also, if necessary, for the development of energy projects for clients. The Central Bank of Iran also reported on Friday, September 22, that 'under this contract, the resources of the Danish bank will be allocated to finance construction and production projects in the private and public sectors that have obtained the necessary permits through legal processes within the country.' Following the lifting of sanctions related to the nuclear program under the Iran nuclear agreement known as the JCPOA, bilateral trade between Iran and Europe has increased. Although according to official statistics from the Iran Trade Development Organization, Iran's non-oil exports to Europe in the first five months of this year decreased by 25% compared to the same period last year, reaching 521 million dollars, Iran currently exports 700,000 barrels of crude oil to Europe daily. Europe halted oil imports from Iran in 2012, and after the JCPOA, particularly in the second half of last year, gradually increased oil imports from Iran, now importing crude oil from Iran at levels close to those before the sanctions. On the other hand, Iran's imports from the European Union in the first five months of this year increased by 34%, exceeding four billion dollars. Among European countries, Germany, Switzerland, Italy, France, and the Netherlands have had the highest exports to Iran.