Iranian banking newcomer struggles as fear of sanctions hits humanitarian deals
By Jonathan Saul
LONDON (Reuters) - International banks are shying away from processing humanitarian deals with Iran for fear being fined for breaking Western sanctions, despite moves intended to facilitate the trade, a senior Iranian banker said.
The sanctions regime, imposed by the United States and European Union over Tehran's nuclear program, allows trade in humanitarian goods such as food and medicine.
Yet many banks avoid dealing with Iran at all due to the heavy fines handed out by U.S. authorities for trading with sanctioned countries including the Islamic Republic, such as a $8.9 billion penalty imposed on BNP Paribas (BNPP.PA: Quote) of France.
Tehran-headquartered Middle East Bank, which is privately owned by investors that include small and medium-sized Iranian firms who can each hold up to a 5 percent stake, started operations on Nov. 1, 2012 with a focus on the humanitarian trade. Nevertheless, the bank continues to find it hard to get deals processed, its chief executive, Parviz Aghili, said.
"Going though a very simple process of opening letters of credit for the importation of goods, even humanitarian goods, has become much more difficult and a hassle," Aghili told Reuters in an interview.
"The (international) banks just do not want to take the risk. They understand and tell us that the rules and regulations are there. But they say the expected return is not enough to justify the risk. They tell us, 'if anything goes wrong, we would be faced with huge fines'. And this is what happens with 99 percent of the banking system outside of Iran."
Iran has been trying to get HSBC (HSBA.L: Quote) to process humanitarian transactions it has frozen because of concerns about potential breaches of sanctions.
U.S. officials stress they have expanded licenses issued for food, agricultural goods, medicine and medical devices to Iran. Continued...