The Embargo: Iran's Economic Paralysis or Damage to Western Interests? Bank Saderat, the Top Private Bank in Iran and the Middle East, Has International Ambitions. Seyed Mohammad Jahromi, Its CEO, Talked to Anne Guillaume-Gentil about the Bank's Strategy and His Analysis of the Impact of the Sanctions on Iran Exclusively for the Middle East Magazine
Guillaume-Gentil, Anne, The Middle East
Can you briefly outline the history of Bank Saderat?
Bank Saderat was founded 58 years ago by the private sector in Iran and held a substantial part of the country's economy. After the revolution, the bank was nationalised and in June 2009 was privatised, to become one of the top private banks in the Middle East. At the last general meeting, over 10 million shareholders approved a 50% increase of the bank's capital from $1.6 billion to $2.4 billion incorporating its profits. This improves our lending ability to customers and allows us to grant loans up to 700 million euros in size. The increase became necessary because we were involved in investing up to $12.5 billion in the oil and gas industry.
Has privatisation changed the bank's strategy?
We have defined a new strategy. We have a new management team and new rules of employment. We have also decided to increase our global presence.
Before its privatisation, the bank had plans to expand in Syria, Malaysia, India, China and Iraq. Is this still your strategy? Are you also planning to have a presence in Latin America and Africa?
To safeguard the interests of our customers, we need to expand internationally. I want to emphasise that the bank's foreign trade amounted to about three billion euros. As a private entity it grew to seven billion euros last year. We achieved this result, because, as a private entity, we were able to maximise our resources. Without making significant investments, we have reorganised ourselves. We also have a different approach to profits. We now have a 14% share of the market in Iran; our target is to take it to 20% next year.
Had it not been for the embargo, we were expecting to triple or even quadruple our business in Europe, particularly in Germany and France. It is our strategy to open new subsidiaries, but we have only been privatised for one year. Today, in the countries that you have asked about and in others, we are actively working to launch our own banks or joint ventures. We had a representative office in the United States which was closed whilst the bank was a state bank. We're now trying to reopen it.
Bank Saderat was placed under embargo in September 2006. Will the privatisation allow you to lift the sanctions?
We have to fight back because there is an embargo. An effective manager is one who seeks opportunities and can transform them into viable businesses. The US and Europe's embargo targets Iran's state and public entities. We were informed we were under embargo because the bank belonged to the Iranian state. Last year we became a private bank. I wrote a letter to the European Commission and to the central banks in the UK, France and Germany, stating this fact. The West says that it does not to want the embargo to impact upon the population, but the bank is now owned by private Iranians. We ask you not to embargo Bank Saderat.
Is your action purely political or have you instigated legal proceedings, like Bank Melli in the UK?
We are involved only in the legal side with the European Union and with the countries who put us under embargo. I hope the judicial review in countries such as France will look closely at our records and drop this embargo.
What was the impact of the embargo on your bank and how did you cope with this situation? Especially, since June 2010 when the Security Council adopted a new set of sanctions, the aim of the United States and Europe was clearly to paralyse the Iranian banking system and prevent any trade, investment and technology transfer in the oil and gas sectors.
There will always be a way to circumvent the effects of an embargo. The economy will make its own natural adjustments to compensate for the restrictions imposed upon it. Historically, you will find that embargoes often had a positive effect on many developing countries. …