Russia's second-largest bank VTB plans to open a bank in Iran by the end of 2025, pending approval from Iranian regulators, VTB Chief Executive Andrei Kostin said on January 17, Interfax reported.

Banking relations between Iran and Russia have taken an upward direction following the imposition of sanctions on Russia in 2022 due to its war in Ukraine. VTB, Russia's second-largest bank, has been at the forefront of these evolving ties. In January 2023, the bank initiated a money transfer service to Iran, followed by the opening of an office in Tehran in June 2024.

"Today we are announcing that we plan to open a bank in Iran by the end of this year," Kostin told reporters. "This would mark the entry of the first Russian bank into the Iranian market."

"We are appealing to the Iranian leadership and expect that we will be granted permission at the end of this year. We currently have a representative office, which we opened in October 2023. Now we are transforming it into a full-fledged bank," said the head of VTB.

The announcement comes as Iranian President Masoud Pezeshkian visits Moscow for talks aimed at strengthening bilateral economic ties. Both countries are seeking to deepen financial cooperation as they face Western sanctions.

"We are appealing to the Iranian leadership and expect to receive their approval by the end of this year," Kostin added.

The move would represent a significant step in Russia-Iran banking relations, potentially easing trade settlement between the two nations that have increasingly aligned economically in response to international restrictions.

The announcement's timing coincides with discussions between the two countries' leaders on a new comprehensive strategic partnership agreement.

Debit cards between the two countries became integrated earlier in 2024, according to officials at the Central Bank of Iran.

In 2023, the two central banks signed a significant agreement to establish banking ties, as both are disconnected from international interbank messaging systems such as SWIFT.

VTB had said earlier in 2023 that it was setting up operations in free trade zones, including Amirabad port and Kish in the Persian Gulf.

Amirabad Port, located on the Caspian shore, stands as the largest port facility of its kind and the third-largest in the country. In August, parliament members approved a proposal to designate the port as a free trade zone.