A branch of Iran-Europe commercial bank is to open in two weeks in Tehran, says an official at Iran's Bank of Industry and Mine.

The bank, a joint financial institution run by Iranian and German banks, is registered in Germany, Iran's biggest trading partner in the European Union, and has a major stake in the Iranian Bank of Industry and Mine (San'at va Ma'dan), with other Iranian banks such as Mellat, Tejarat and Refah also holding shares.

The bank has been operating in Iran's Kish Island since early 2005, as the first foreign bank operating in the country after the 1979 revolution, Abbaspour, head of the public relations bureau of Bank of Industry and Mine, was quoted by IRIB as saying.

While foreign owned banks are currently allowed to operate in Iran's free trade zones, but not in the mainland, joint Iranian and foreign banks have been permitted to engage in banking operations in Iran since last May, when a new policy was adopted by the Money and Credit Council of Iran's Central Bank.

Opening foreign bank branches in Iran could sharpen competition among national financial institutions and, more importantly, attract foreign investments as well as facilitating trade transactions with other countries.

Banks applying for establishment of branches in Iran are required to operate within the framework of Iran's banking system, in particular the usury-free banking regulations introduced after the Islamic Revolution.

MMM/GM