Bloomberg, May 3, 2016 – European companies flocking back to Iran are doing so without their favored lenders at their side.
Less than two years after BNP Paribas SA agreed to pay a record $9 billion U.S. fine in part for dealings with Iran, many of the continent’s biggest banks remain unwilling to go anywhere near Iran-related business for fear that they will run afoul of remaining U.S. sanctions on the country.
The reluctance adds a complication for manufacturers from Airbus Group SE to PSA Group, the maker of Peugeot cars, as they seek to capitalize on growth in Iran. The funding issue has become a financial diplomacy hot-spot. In France, the government, worried that companies may lose exports, has started talks with the U.S. Treasury’s Office of Foreign Assets Control to get a commitment that banks can do business without incurring legal woes, two people with knowledge of the matter said.
“Banks want the maximum certainty,” said Tanguy Coatmellec, a Dubai-based partner at Ernst & Young’s financial-services advisory group. “A big part of the risk is really the U.S. political position over the long term. Either financing methods will be found or these contracts won’t be finalized.”

Nuclear Sanctions

France’s Societe Generale SA, Germany’s Deutsche Bank AG, Zurich-based Credit Suisse Group AG, ING Groep NV in the Netherlands and the U.K.’s Standard Chartered Plc are among the big European banks that say they’re generally not prepared to do business in Iran yet.
The U.S., Russia and European countries in January lifted a series of economic sanctions in exchange for Iran’s agreement to curb its nuclear activities. Still, significant restrictions remain on Iran to combat terrorism support, human rights abuses and ballistic-missile development. A crucial ban remains on dollar-denominated trades related to Iran, scaring away most large European banks.

Operational Risks

BNP Paribas Chief Executive Officer Jean-Laurent Bonnafe said in February that Iran hadn’t reopened for global banks. There is a “very partial and progressive lifting of the embargo,” he said.
Societe Generale doesn’t plan to restart activities in Iran given the uncertainties that remain, the bank said in an e-mailed statement Thursday. “The differences between European and American regulations lead to strong operational risks for financial institutions,” the bank said.
Executives from large European lenders have been mostly absent from recent business delegations to Tehran.