World  Business and Economic Analysis 

export finance,

  • Europe takes steps to remove banking obstacles with Iran

     

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    In the past few days, two Danish banks as well as an Austrian one have signed major finance deals with Iran to become the first two European countries in providing loans to Iran after the implementation of nuclear deal.

    Denmark's Danske Bank signed a €500 million finance contract with 10 Iranian banks on Thursday, becoming the second European lender to ink such an agreement with Iran, after Austria’s Oberbank signed a major finance deal ceiling of €1 billion with 14 Iranian banks.

    The move is significant as European banks are particular wary of doing business with Iran due to US sanctions. Iran is hoping that the measure would lay the groundwork for other European companies to take similar steps in the near future.

    Danske’s contract has been signed with Saman Bank, Bank Mellat, Tejarat Bank, Bank Melli Iran, Bank of Industry and Mine, Bank Sepah, Bank Pasargad Iran, EN Bank, Bank Keshavarzi, and Parsian Bank.

    Danske, founded in 1871 and headquartered in Copenhagen, is active in 16 countries in the world and in addition to banking services, it provides insurance and housing services as well.

    Karsten Stroyberg, Head of Middle East & North Africa, Danske Bank, told reporters that the contract signed with Iran was an important step in facilitating trade with Iran, especially among the Nordic countries including Denmark, Sweden, Norway and Finland.

    According to him, the contract makes financing bigger and long-term projects possible, thus making it a “great opportunity” for development of trade between Iran and the Nordic region.

    The second contract signed between Iran and Denmark after months of negotiations is an MoU with EKF (Denmark's Export Credit Agency), which provides credit coverage and can finance Iran’s various projects, particularly projects related to infrastructure.

    Speaking to reporters, Jørn Fredsgaard Sørensen, head of EKF’s Country, Bank and Sector Risk department, said the contract issues guarantees covering loans to Iranian companies. Under the contract, EKF will also make efforts to encourage Danish companies to do more business with Iran.

    “Doing business with Iran is improving. At the moment, we have made a tunnel through the mountain. Next step will be to place a train on the railroad and keep it going through the tunnel,” he said.

  • Iran’s latest MoUs: shipping, power and export finance

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    Iran’s latest MoUs: shipping, power and export finance
     by Melodie Michel


    The Iranian government has been busy restoring trade and investment relationships since the lifting of nuclear-related sanctions on January 16, 2016. Here is a round-up of the latest economic agreements signed by the country:

    Shipping: Oman and Switzerland come on board

    Swiss-based shipping company MSC has signed an MoU with the Iran Ports and Maritime Organisation (IPMO) to increase port calls at Bandar Abbas, Chabahar and Bandar Imam. The agreement also involves MSC vessels, which returned to Iran in January after six years, carrying shipments to Iran from international ports, and effectively opens up Iranian investment opportunities to Swiss shipping firms. It was agreed during a three-day visit by Swiss President Johann Schneider-Ammann at the end of February.

    Still in the shipping sector, Oman’s Port of Salalah has signed an MoU with Iran’s Shahid Rajaee and Chabahar Ports, to develop and promote an all-water route between the three ports, representing a roundtrip of 2,152 nautical miles. This will ultimately support increased trade and investment between the two countries.

    Power: Far-reaching deal with Siemens, collaboration with Ukraine

    On March 2, Siemens signed a number of agreements with the Iranian MAPNA Group in order to modernise the country’s energy infrastructure. The MoUs include a licence agreement under which MAPNA will acquire technological know-how to manufacture Siemens F-class gas turbines in Iran. According to Siemens, the parties will co-operate to deliver more than 20 gas turbines and associated generators over the next decade.

    As a first project under the licence agreement, the companies signed a contract for the Bandar Abbas power plant, for which Siemens will deliver two F class gas turbines and generators.

    The two companies also signed an MoU to jointly develop the roadmap for the extension and optimisation of the overall Iranian power and electrification system, including power generation, transmission and distribution topics, but also providing solutions including EPC (engineering, procurement and construction) as well as financing options.

    A Ukrainian delegation arrived in Tehran on Monday (March 7), and had reportedly signed a number of agreements with the Iranian government, including one aiming to resume bilateral energy co-operation. This will help increase the efficiency of Iranian power plants and high-voltage transmission lines.

    The two countries are also said to have signed an MoU for the expansion of economic co-operation in the fields of agriculture, metals, mining and aviation.

    Export finance: Germany and UK work towards reopening

    Iran’s export credit agency (ECA), the Export Guarantee Fund of Iran (EGFI), and its counterpart, UK Export Finance (UKEF) signed an MoU on March 5 to enhance trade and economic co-operation between the two countries.

    Under the MoU, the two ECAs will work together to identify opportunities for trade in capital goods, equipment and services. The agreement also allows the parties to co-finance and co-guarantee financing for projects or contracts in third countries involving British and Iranian exports.

    Iranian media have also reported that Iran had agreed to clear its US$560mn of cover debt with Germany’s ECA, Hermes, by September, before Germany resumes providing guarantees for German exports to the country.

    These latest agreements follow the ones signed at the end of January with France’s Coface and Italy’s Sace on outstanding payments owed by Iranian debtors due to the sanctions that largely blocked money transfers. They are expected to pave the way for the reopening of ECAs’ guarantee lines and a return to business as usual in Iran.

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