UK Pushing Lenders to Boost Iran Trade

The British government is coaxing lenders into facilitating trade with Iran. Recently, British officials have sought to boost business ties with Iran—a year on from the lifting of international sanctions—as Britain tries to forge new trade ties following June's vote to leave the European Union.

Sources with knowledge of the discussions said Britain's Finance Ministry had tried to use the government's influence with RBS and to a lesser extent Lloyds, in which it holds a minority stake, to help speed up trade finance with Iran, including clearing services for Iranian banks in pounds, Reuters reported. 

Despite the lifting of international sanctions, which included banking restrictions, Iran continues to struggle to access western finance and tap major western banks, hindering trade and investment.

A senior Iranian banking official said Tehran had several meetings in recent months with British government officials. "We asked UK officials to help us to overcome this issue. We were promised that the British government would try to convince the banks, including Lloyds and RBS," the official said.

"Nothing is happening on the ground."

A British government source said the finance ministry was highly aware of the complexities around UK and Iranian banking channels, and banks would consider factors, including remaining US sanctions, and money laundering issues. The British government owns 71% of RBS, though its bank shareholdings are managed by UK Financial Investments, which is meant to ensure they are managed on a commercial basis.

"The government does not take the risk decisions; they are only shareholders," a western source with knowledge of discussions said. "It is not the role of shareholders to set the risk appetite of a bank."

An RBS executive said separately the bank was "not really interested in the Middle East" and was focused on Britain and Ireland for about 90 % of its profits.

A Lloyds spokesman said it was a UK-focused retail and commercial bank, adding that it was "mindful that Iran remains a higher risk country with which to do business".

"We therefore consider all requests on a case-by-case basis in order to protect the bank and our customers," the spokesman said.