Euro­pean banks hes­i­tate on Iran, wary of US fines

The Pak Banker - - FRONT PAGE -

Western com­pa­nies have been rush­ing into Iran for a part of post-sanc­tions busi­ness ac­tion but Euro­pean banks, still reel­ing from puni­tive US fines over links to the coun­try, are wait­ing on the side­lines un­til they feel it is safe to do busi­ness with Tehran.

"Sanc­tions have been lifted but re­ally things are still not very clear," a source at a ma­jor French bank told me­dia on con­di­tion of anonymity.

US and French in­ter­pre­ta­tions on the cur­rent state of play are "not aligned", the source said. "We shall not be tak­ing any new ini­tia­tive in this do­main."

The seal­ing of a nu­clear deal with world pow­ers has ush­ered Iran in from the diplo­matic deep freeze, open­ing the door to a raft of lu­cra­tive new part­ner­ships.

France has al­ready hailed a new era af­ter wel­com­ing Ira­nian Pres­i­dent Has­san Rouhani, who sealed a host of post-sanc­tions deals last week on a visit to Paris, the head­liner the pur­chase of 118 Air­bus air­craft. But when it comes to what oils the wheels, high fi­nance, there is hes­i­ta­tion, at least on the part of Euro­pean banks.

"The hefty fines levied on th­ese fi­nan­cial in­sti­tu­tions dur­ing the sanc­tions has made them par­tic­u­larly wary," Farhad Alavi, a lawyer spe­cial­is­ing in trade is­sues in­clud­ing sanc­tions, told me­dia from Wash­ing­ton.

"Euro­pean banks are not only con­fronted with po­ten­tial sanc­tions risks, but also other ex­po­sure points un­der in­ter­na­tional bank­ing reg­u­la­tions and prac­tices," Alavi added.

Pru­dence is the watch­word for bankers who have had their fin­gers burned be­fore in the shape of swinge­ing fines handed down by US reg­u­la­tors.

The El­y­see Palace says France has agreed deals worth up­wards of $15 bil­lion with the Is­lamic Re­pub­lic. Yet the nitty gritty of how the in­vest­ments will be drawn up and fi­nanced re­quires hands-on bank­ing. In the past, some banks were too pro-ac­tive to­wards Tehran and saw Wash­ing­ton ex­tract a heavy price for vi­o­lat­ing the old sanc­tions regime.

The most spec­tac­u­lar ex­am­ple, which is still on ev­ery banker's mind, was a record $8.9 bil­lion fine im­posed on BNP Paribas in 2014.

The is­sue is also tax­ing bank­ing minds else­where in Europe, in­clud­ing Ger­many. "Deutsche Bank has noted the eas­ing of Amer­i­can and Euro­pean sanc­tions against Iran," said a spokesman for the Ger­man gi­ant which last Novem­ber took a $258 mil­lion fine for do­ing busi­ness with US-sanc­tioned en­ti­ties in­clud­ing Iran and Syria. "Un­til fur­ther no­tice the group will stick to its de­ci­sion and not un­der­take Iran-linked busi­ness," the Deutsche spokesman in­sisted.

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