The bank was established in London in 1973 in the
name of Iran Overseas Investment Bank Limited (IOIB) as an authorised
institution and was accordingly subject to the regulatory framework
of the Bank of England. It was originally a consortium bank, which
invested surplus Iranian oil monies in Western economies. At that
time the share ownership was 50% Iranian, with the remaining 50%
equally distributed between eight International banks.
As a consequence of the Iranian Islamic revolution in 1979, the
Bank’s activities became somewhat curtailed as the syndicated
loan market was no longer available to Iran, and in 1982 the eight
non-Iranian International banks shareholders were bought out, hence
IOIB was then owned solely by four Iranian banks, (Bank Saderat
Iran, Bank of Industry & Mine, Bank Melli Iran and Bank Mellat)
each holding 25% of the equity. This ownership structure remained
in place until 2001.
In the mid ‘80’s the Bank developed into trade finance
business, mainly with Iranian bank counter-parties. This business
expanded considerably during the latter part of the 1980’s
with the introduction of deferred payment letters of credit from
the Iranian banking system, which contributed a major portion of
the Bank’s business.
In the late 1990’s, the Bank of England and Bank Markazi
Jomhouri Islami Iran (The Central Bank of Iran) came to the view
that the presence of six Iranian banks in London (all effectively
State owned and involved in similar trade finance activities) should
be restructured. Subsequently in November 2001 Bank Saderat Iran,
Tehran attained the 75% of the other three shareholders, and thereby
acquired 100% control of IOIB. In March 2002 the name of the Bank
was changed from IOIB to Bank Saderat PLC to reflect the new ownership.
Bank Saderat Iran, London branch had a long history in London,
being the first Iranian bank to be established in the City in 1963,
and the main purpose for Bank Saderat Iran taking over IOIB was
to combine the undertaking of its own London branch with its newly
acquired UK subsidiary in compliance with the discussions between
Bank Markazi Jomhouri Islami Iran, and the FSA. The branch was profitable
and its balance sheet footings was larger than IOIB. With effect
from 1st July 2002 the assets and liabilities of the London Branch
were integrated into Bank Saderat PLC with combined balance sheet
footings of £940m approx.
Since the merger there has been a continuing improvement in the
profitability of the bank, primarily achieved through increasing
the Bank’s trade finance and commercial lending portfolios.
The Bank continues to put the financing of Iranian trade, both imports
and exports, at the heart of its corporate strategy, but has also
increased its exposure in longer-term infrastructure projects within
Iran. In order to assist in the funding of these projects and to
ensure the Bank preserves a well-matched portfolio, Bank Saderat
PLC raised funds by means of a three-year syndicated loan in the
London market. The initial intention was to raise US$100m, but owing
to over-subscription the amount was increased to US$120m. Bank Saderat
PLC is proud that this syndication, the first by a UK incorporated,
Iranian owned bank, since the Islamic Revolution, was such a success,
with participants from Europe, the Far East and the Persian Gulf
The Bank is also preparing for the introduction of the new Capital
Adequacy Directive, commonly known as Basel II. Under the new Basel
regime the financing of Iranian trade will, in all likelihood, make
greater demands on the capital allocation of the Bank. Bank Saderat
PLC is sufficiently well capitalised to absorb the increased requirement
and remain well above the minimum regulatory Risk Asset Ration set
by the FSA.
Whilst Iran will remain the Bank’s core business it is the
intention of the Board of Directors to diversify its asset base
in line with the five year plan which was formulated at the time
of the merger of Bank Saderat Iran, London branch and Iran Overseas
Investment Bank PLC.