Tehran is planning to create its first international financial centre, bringing together state-run, private and international banks, along with the city’s stock exchange, in a bid to follow the successes of similar zones elsewhere in the Gulf.

The planned zone, to be named the Iran Financial Centre (IFC), has the backing of the municipality of Tehran and is scheduled to be established by 2012.

It will seek to emulate the success of centres such as the Dubai International Financial Centre and the Qatar Financial Centre, which have attracted large numbers of international institutions.

The Tehran Stock Exchange (TSE), one of the central bodies behind the project, says the move is overdue as part of the country’s efforts to keep pace with its international rivals.

“We want to get all the financial institutions together – the banks, the stock exchanges and other financial institutions – in the same place, so that we can drive growth forward,” says Mohammad Ebrahim Jahandoost, international affairs manager of the TSE.

“We will be a shareholder in the company, which is behind this project, as are most of the big banks in Tehran.”

According to Jahandoost, several potential locations in central Tehran have been identified for the development, although a final decision has yet to be made.

He says the move makes sense, given the central bank’s recent approval for 10 international banks to set up in the country.

“We would welcome inter-national banks in the centre,” he says. “Interest is high, despite the sanctions.”

The plans come as the country strives to reform its financial system and bring it closer to international standards.

As part of that, the TSE is to hold a rights issue to raise an additional IR3bn ($302m), partly to fund an electronic trading system for brokers.

Jahandoost says the TSE has signed an agreement with France’s Atos-Euronext for a trading system that will allow brokers to trade electronically.

The TSE will also look to float itself on the main exchange of the Tehran bourse, with a 2.5 per cent offering to be made to the public.

In line with its push to adhere to international standards, Jahandoost says the TSE also recently granted approval to Iran’s largest private bank, Parsian Bank, to set up a new investment banking division.

Parsian Bank will become the third investment bank in Iran, following approval earlier this year for the privately held Amin and Novin banks to create investment units.

Parsian’s vice-chairman, Alireza Kashef, tells MEED the bank is likely to set up dual headquarters in London and Tehran to access international markets.

“We are going to start in the near future,” Kashef says. “We are currently doing studies and preparing the infrastructure for the business.”

Tehran has previously said that investment banks will be used to help privatise many of the country’s public sector companies by 2015, with a focus on the steel, banking and telecoms sectors.