US Secretary of State John Kerry told Europe’s top banks they have nothing to fear from resuming business with Iran, as long as they make proper checks on trade partners and pursue “legitimate business”.
European banks, some of which have been punished for breaking sanctions imposed on Iran, are skeptical it is now safe for them to restore trade ties with the country and have largely held back since the lifting of some restrictions in January.
“We want to make it clear that legitimate business, which is clear under the definition of the agreement, is available to banks,” Kerry said on Thursday during what is likely to be his last trip to London before November’s US election.
Nine executives from leading European banks took part in the meeting, along with British Foreign Secretary Philip Hammond, secretary of state for business Sajid Javid and Norman Lamont, trade envoy to Iran, a British official told Reuters.
Deutsche Bank (DBKGn.DE) Chief Executive John Cryan, HSBC’s UK head Antonio Simoes and Credit Suisse Chief Financial Officer David Mathers were among the senior bankers who attended.
Representatives from Standard Chartered and BNP Paribas, which have both been fined billions of dollars for breaking sanctions in the past, also attended along with executives from Santander, Royal Bank of Scotland, Barclays and Lloyds.
The United States and Europe lifted sanctions in January under a deal with Iran to limit its nuclear program, but other US sanctions remain, including a ban on Iran-linked transactions in dollars being processed through the US financial system.
That has left Europe’s banks nervous of resuming trade, despite encouraging words from the US. And there was little immediate sign Kerry had provided sufficient additional reassurance during the meeting on Thursday.
Standard Chartered said after the meeting that it “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”.
French bank Societe Generale said given “remaining uncertainties” it had no plans to resume commercial activities with Iran, adding: “Differences between European and US systems generate significant operating risks for financial establishments”.
Other banking and finance sources said uncertainty about the outcome of US presidential elections in November heightened their reservations. A Reuters/Ipsos opinion poll released on Wednesday showed Republican Donald Trump pulling even with likely Democratic rival Hillary Clinton.
“What if Trump wins? Do you want to get involved with contracts now that perhaps in six months would be unenforceable?” a banking source following Iran said.
“There is a distinct reluctance to do anything among the banks.”
No Letter of Comfort
Another source familiar with European banks’ thinking said there was still little clarity on what trade could be done.
“The assurances given by Kerry are still vague and that goes for the whole US approach - there is ‘no letter of comfort’ for the banks,” the source told Reuters.
Hammond said the strategic objective was to draw Iran back into the international community, and this meant overcoming “the reality of what the European banks are finding in practice”.
“We’re trying to bridge that gap ... to allow these European and global banks to support European businesses in resuming normal trade and investment patterns with Iran,” Hammond said.
