Finance from Canada
 |
The
ultimate goal of the Canadian financial institutions is to open up their own branches in
Iran |
Canada, as a North
American country, won’t be the first name that comes to your mind when thinking about
Iran’s financing partners. But the fact is that Export Development Corporation (EDC),
Canada’s official export credit agency, works and negotiates regularly with the
Iranian banking sector.
To get more on this, Iran International interviewed Michael Harkins, EDC’s visiting
Financial Services Manager. “I was pleasantly surprised. A lot of my previous
misgivings and impressions which I got from abroad have changed for the better,” he
says on his first visit.
The Corporation: EDC has been
operational since 1944. We support a whole variety of corporations in Canada; from small-
and medium-size enterprises to large international corporations. EDC has a variety of
different products including political risk insurance, contract bonding, financing and
project finance insurance for companies exporting abroad.
Active in Iran: EDC has been
active in Iran for a number of years. A lot of our support is actually specifically
through my program which is the “documentary credit insurance” program. We
support Canadian banks in their letter of credit business abroad. We offer them a cover on
their exposure to foreign banks and pretty few Canadian banks are conducting transactions
such as that with letters of credit through the commercial banks and Central Bank of Iran,
Bank Tejarat, Sepah, etc. A lot of that support has been for wheat, and other commodity
exports. Wheat is the largest export that EDC is supporting. We have seen also
transactions for goods destined to oil and gas sector, pharmaceuticals and so forth.
A Surveillance Visit: My trip to
Iran is because of EDC’s high exposure to Iran, to the Central Bank and to some other
commercial banks. It is our practice to go into the markets that we have exposure to, and
conduct surveillance visits trying to introduce ourselves, let potential clients know
about our program and try to find out more about the banks. I think there is a change and
evolution in the banking sector of Iran right now. We are interested to find out more
about it, track it and see the impacts of the relationship between the commercial banks,
and the Central Bank. The shift in power is how much more independent the commercial banks
will be. The fact that more foreign companies are coming to Iran is beneficial to our part
and certainly to Iran.
Opportunities for Canada: There
are great opportunities in Iran for Canadian corporations that should be pursued. In the
future there will be great opportunities for cooperation between Canada and Iran on the
financial institutions side. What I understand is that the ultimate goal of the Canadian
financial institutions is to open up their own branches in Iran, rather than to work in
cooperation with the banks here. I think they like to see more transparency, they like to
see international standards applied and that would further business between banks.
The New Contract: The recent
Iran-Canada deal which was supported by EDC is a breakthrough for the Canadian exporter,
the EDC and for Iranian banks including Tejarat and the CBI. I think it shows becoming
more familiar with the market, it shows that both sides can negotiate in good faith and
positive affects can come of those negotiations. An improvement in the Iranian banking
sector is that commercial banks are pushed to evaluate credit more closely to become more
independent. They are eager to undertake new challenges with more independence. |
