Banking executives of both nations met for bilateral negotiations on removing hurdles on the way of establishing banking ties and engaging in banking transactions
Following the final agreement for a multibillion dollar South Korean finance deal for Iranian projects, private Iranian banks have signed a memorandum of understanding with their South Korean counterparts with the aim of expanding correspondent banking relationss.
"Banking executives of both nations met for bilateral negotiations on [removing] hurdles on the way of establishing banking ties and engaging in banking transactions, and agreed on a number of issues to expand their ties," Mohammad Reza Jamshidi, secretary-general of Iranian Private Banks' Association, told IRNA.
According to Jamshidi, a delegation consisting of chief executives with a number of major Iranian private banks and credit institutions travelled to the South Korean capital at the invitation of KFB.
"CEOs of Bank Pasargad, Bank Parsian, Middle East Bank, Shahr Bank, Bank Day, Bank Mellat, Tourism Bank and Melal Credit Institution were part of the delegation," he added.
As Jamshidi says, the two sides agreed as part of the MoU to increase their non-dollar transactions, employ new technologies in the banking industry and exchange experts for educational purposes.
Iran has been gradually working to offset the role of US dollar in its dealings and financial reporting, as longstanding initial US sanctions remain in place and that is why it prefers to engage in banking ties with South Korea in other currencies, especially euro.
"Iranian banks wanted a bigger share of the deals to be made in euro in the negotiations, which was welcomed by the Korean side," Jamshidi said.
Iranian officials have repeatedly said it would not be practical to engage in greenback since it does not play a major role in the country's currency basket and foreign exchange resources.
In a statement, KFB also confirmed that it has signed an MoU with its Iranian partners for boosting bilateral cooperation.
As reported by Yonhap, South Korea's largest news agency, the two entities agreed to facilitate banking services for exporters and importers of both countries in a move "designed to meet growing demand for financial services due to increased trade".
Jamshidi pointed out that the trip by the Iranian delegation to Seoul was made in order to follow up on and finalize initial agreements that were made as part of the former president Park Geun-hye's landmark Tehran visit in early May.
Friday's trip was supposed to take place about two months ago, he added, but it was delayed due to its coincidence with Iranian banks' shareholders' meetings.
The MoU comes on the back of the €8 billion South Korean finance for Iranian projects finalized in Seoul last month between the Korea Export–Import Bank and 12 Iranian agent banks.
As part of the agreement, the Korea Trade Insurance Corporation is to guarantee up to €5 billion of finance activities in Iran.