Friday, May 13, 2016
Some of the top European bankers who met with U.S. Secretary of State John Kerry to hear assurances that they can resume business with Iran still have no plans of doing so.
Britain’s Standard Chartered bank, which along with France’s BNP Paribas has been fined billions of dollars for breaking U.S. sanctions against Iran in the past, issued a statement after the meeting on May 12 saying it hasn’t changed its plans.
“We will not accept any new clients who reside in Iran, or which are an entity owned or controlled by a person there… Nor will we undertake any new transactions involving Iran or any party in Iran,” the bank said.
French bank Societe Generale said “remaining uncertainties” will prevent it from resuming commercial activities with Iran.
“Differences between European and U.S. systems generate significant operating risks for financial establishments,” it said.
Deutsche Bank, whose Chief Executive John Cryan met with Kerry, acknowledged afterwards the “increased expectations on the banking sector” to facilitate business with Iran.
But the bank said that with many U.S. and EU sanctions still in place, “Deutsche Bank continues to generally restrict business connected to Iran.”
Banks remain particularly wary of the U.S. ban on dollar-based transactions with Iran being processed through the U.S. financial system.
All of the big global banks have extensive ties with American banks and markets, and it would be difficult for them to avoid at least technical violations of such a ban even when processing transactions that are authorized under the nuclear deal.
Moreover, banking executives say they are wary about the outcome of the U.S. presidential election in November. The likely Republican presidential candidate Donald Trump, like other Republicans, has vowed to take a tougher line on Iran.
“What if Trump wins? Do you want to get involved with contracts now that perhaps in six months would be unenforceable?” a banking source told Reuters.
HSBC’s UK head Antonio Simoes and Credit Suisse Chief Financial Officer David Mathers were among the senior bankers who attended, along with executives from Santander, Royal Bank of Scotland, Barclays, and Lloyds.
Despite Kerry’s strenuous efforts to assure banks that the United States won’t stand in the way of legitimate deals with Iran, banking officials said they simply remain unconvinced.
Banks have asked for written assurances from the U.S. Treasury Department — essentially a guarantee they won’t be punished if they do deals with Iran.
But Washington has been reluctant to provide them with that for fear that it would appear to be softening tough U.S. sanctions that remain in place for Iranian activities like ballistic missile development that are not related to its nuclear program.
As a result, “the assurances given by Kerry are still vague and that goes for the whole U.S. approach. There is ‘no letter of comfort’ for the banks,” one official told Reuters.
The bank reaction is not good news for the United States and other world powers, which have been striving to show Iran that there are tangible benefits from forgoing nuclear weapons development.
Source: Reuters and AP
