Iranian-Egyptian Bank to Open

Cairo, Egypt Adam Gonn – An Egyptian bank, jointly owned by an Iranian company, plans to set up its first branch in Iran.

Iranian-Egyptian Bank to Open

The Egyptian Misr Iran Development Bank, which is 40 percent owned by the Iran Foreign Investment Company, has announced that it will open its first branch in the near future, the Iranian Mehr News Agency (MNA) is reporting.

The Misr Iran Development Bank has been operating in North Africa for 35 years and over the last couple of years it has slowly moved more of its assets to the Iranian market.

The Iran Foreign Investment Company was established in 1998 with the purpose of expanding Iranian holdings abroad. In addition to its investment in Egypt, the company has ventures in Jordan, Germany, Brazil and the United Arab Emirates.

While the bank portrays the announcement as natural commercial expansion, experts have a different analysis.

David Butter, regional director for the Middle East and North Africa at the Economist Intelligence Unit, told The Media Line that the deal would not increase economic ties between the two countries.

“[It has] nothing to do with boosting the economic ties,” he said, calling the move “not very extensive.”

“Iran has recently taken steps to make it easier for foreign banks to set up branches there, but so far there are none,” he added. “But since this bank is a foreign bank with Iranian owners outside Iran,” the Misr venture is having less difficulties, he said.

Iran is facing increased financial isolation over its alleged nuclear weapons program and both the United Nations and the United States recently imposed new sanctions on Iran’s banking and financial sectors, creating a decrease in foreign currency in the country.

Washington, along with various foreign governments, claim Iran is using its civilian program as a cover to produce atomic bombs, but Tehran argues the program is for peaceful power production.

Iran has been trying to overcome the negative effects of these sanctions by efforts such as offering a 16 percent interest rate to foreigners who invest in a new Iranian bank established in April.

“I think that Iran is having serious foreign exchange problems and is trying to ease the constraints any way that it can,” Professor Hossein Askari, from the International Business Department at George Washington University, told The Media Line.

Dr. Walid Kazziha, chair of the political science department at the American University in Cairo, says it’s not unheard of for Egyptian companies to make business deals with countries where political ties are shaky.

“The Minister of Trade and Industry Rachid [Mohamed] Rachid recently signed a number of agreements with Syria despite the political tension with Egypt,” said Kazziha.

“If the business men think they can do businesses then the next step is to approach the political establishment and, in this case, the president [Hosni Mubarak] which handles the Iranian political file,” Kazziha told The Media Line.