Alireza Peyman-pak, the head of Iran’s Trade Promotion Organization, said that the state-owned VTB, ranking as Russia’s second most prominent lender, will employ the office for foreign currency transfers.
“This is the first Russian bank that has a direct presence in Iran and it will facilitate transferring part of the foreign exchange earnings from the trust network to the banking network and thus promoting trade transparency,” he added.
The establishment of VTB’s representative office arises from the shared objective of Moscow and Tehran to enhance their trade and transaction capabilities amid constraints imposed by Western sanctions.
VTB, among several key Russian banks, fell victim to sanctions imposed by the United States, the United Kingdom, and the European Union due to Russia’s war in Ukraine. Consequently, the lender has been prohibited from utilizing the SWIFT international financial messaging service.
Since Iran has been disconnected from SWIFT since 2018, bolstering ties with the country has become increasingly critical for Russia. Last year, VTB incurred a substantial loss of $7.7 billion, with Western sanctions disproportionately targeting Russia’s financial sector.
The two nations have already established connectivity between their interbank communication and transfer systems, with Tehran making plans to accept Russia’s Mir payment cards – an alternative to Visa and MasterCard.
In their pursuit of closer economic integration, Tehran and Moscow have sought to counterbalance the repercussions of Western sanctions. Their collaborative initiatives encompass a broad spectrum of projects, including oil swaps, railways, and arms deals.