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Iran's Mellat Bank moving to normalize Seoul branch soon

All News 10:14 January 19, 2016

SEOUL, Jan. 19 (Yonhap) -- The South Korean branch of Iran's Mellat Bank is moving to normalize operations as soon as possible following the landmark nuclear accord that helped to lift international sanctions on the oil-rich country, the branch chief said Tuesday.

Seoul said Sunday that it will step up "reciprocal cooperation" with Iran as countries around the world move to lift economic and financial sanctions against Tehran. Seoul citing allegations that Mellat had violated a UN Security Council Resolution had restricted the bank's operations from 2010 onwards.

"Every effort is being made to restore the necessary infrastructure so normal operations can resume," Kim Tae-gil said in an interview with Yonhap News Agency.

"For the past few years, the bank has not been able to engage in its core business of foreign exchange and trade support," Kim said. "The office stayed afloat by providing limited Korean won-based transaction services."

Before the sanctions went into effect, South Korean carmakers, petrochemical and construction companies did brisk business in the Middle Eastern country, with the Asian country being a major importer of Iranian crude oil.

Mellat Bank opened its South Korean office in June 2001 and supported bilateral trade and foreign exchange transactions, as well as the transfer of wages for Iranians working in South Korea.

In 2009, the branch posted 32.5 billion won (US$26.8 million) in net income, but this plunged to around 760 million won in 2014 in the wake of sweeping sanctions. Such constraints caused the bank to reduce its staff from 36 in June 2010 to 13 at present.

The banker said that with the lifting of restrictions, Mellat has been getting calls from local companies that deal with Iran.

"There is growing hope that things will improve down the line," he said. The official, however, cautioned that it will take time for Mellat to offer the full range of services it did in the past.

He pointed out that the Seoul branch of Mellat's banking system has been effectively disconnected from the international transaction regime for years.

Kim said that Mellat has to first restore the Society for Worldwide Interbank Financial Telecommunication system that can allow it to issue letters of credit. Moreover, he said the bank must reopen its internal bank account network, which will naturally require time.


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