Exclusive: Commerzbank joins peers in paring back services to Gulf

Thu Dec 22, 2016 10:01am EST
 
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By Tom Arnold and Stanley Carvalho

DUBAI (Reuters) - Commerzbank CBKG.DE has told customers in the Gulf it will no longer process their transactions in euros, four Gulf banking sources say, joining other big banks that cut such services after being fined for dealings with Iran.

Major U.S. and European peers have been tightening risk controls in the region after U.S. regulators imposed billions of dollars of penalties on banks in recent years over lapses relating to money laundering and terror financing.

The Gulf, as a close neighbor of Iran and Syria which are subject to U.S. sanctions, has come under close scrutiny from regulators at the same time as an oil price slump has made doing business in the region less profitable.

While sanctions against Iran eased at the start of this year under a global nuclear deal, U.S. President-elect Donald Trump has warned he would scrap the agreement, adding to banks' worries about the region.

Commerzbank, which is partly owned by the German government, told clients in the region in recent weeks that it would no longer clear euro deals from Jan. 1 2017, say sources, citing concerns about "compliance".

A spokesman for the bank said: "In individual countries, we ceased to offer certain transaction banking services."

One of the bankers said he believed the German bank might allow exceptions for certain large low-risk clients.

Commerzbank had been in the crosshairs of U.S. authorities. In March 2015, it agreed to pay $1.45 billion after a probe of its dealings with Iran and other sanctioned countries as well as a separate investigation into money laundering controls.   Continued...

 
A Commerzbank logo is pictured in Frankfurt, Germany, February 12, 2016.      REUTERS/Ralph Orlowski/File Photo