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February 11, 2008

Iran Banks Look to Sidestep US Restrictions

by Dave Nixon

Story link: Iran Banks Look to Sidestep US Restrictions

Iran’s initial investment banks will commence operating next month, part of Tehran’s approach of opening new banking outlets but also part of its attempt to avoid US restrictions on its financial sector.

The three banks will also take a major role in Iran’s strategy to intensify aggressively on the privatisation of national industries including steel, banking, shipping, airlines and telecommunications, said Heidari Kord Zangeneh, deputy finance minister and head of the Iranian privatisation organisation.

The banks, named Amin, Novin and Pasargad, are operated by conglomerates including privately owned investment companies, some of which are associated to private banks, he said.

Mr Kord Zangeneh said that this wass the first time they had had investment banks and they would do what other investment banks all over the world do. They will take share subscriptions and act as an intermediary between the privatisation organisation and the stock exchange, helping them divest our state-owned enterprises.

Iran’s economy is subjugated by the state division, with economists approximating that four-fifths of the country’s value-added gross domestic product originates from the government, especially from oil.

For years Iran has been attempting to sell off elements of state-owned companies not considered vital to national security, ruling out the chief energy companies. Nonetheless, development has been agonizingly slow, regardless of entreaties from Ayatollah Ali Khamenei, Iran’s supreme leader, that privatisation is the “most effective way” to offset the “economic war” being waged by the west.

Mr Kord Zangeneh said Iran would hasten the practice of privatisation, assuring that his organisation would complete the sale of all public companies before the 2015 time limit set out in Iran’s economic plan.

He promised that if he is there for the next two years, between 80 and 90 per cent of the government would be sold.

In the interim, Iran will sell a quarter of the National Copper Industry Company, one of the biggest Iranian businesses, through the Malaysian stock exchange inside the next two months, a stake that Mr Kord Zangeneh said would raise much more than its current $1.5bn (€1bn, £770m) book value.

Tehran was additionally in talks with the bourses in Hong Kong and Jakarta about floating Iranian state companies there, he said.

Such actions are liable to augment western disquiet that Iran is looking east to find investors more worried about securing energy supplies for themselves rather than about punishing Iran for pursuing a nuclear programme.

 

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