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 Iran was never barred from buying food or other humanitarian goods
under sanctions imposed because of its disputed nuclear program, but
measures by the European Union and the United States have made trade
generally more difficult over the past two years by hindering
payments and shipping.
As part of talks in Geneva over the nuclear question, Tehran is
pressing world powers to speed up trade finance arrangements on
humanitarian deals involving both Western and Iranian banks,
according to an Iranian government document seen by Reuters and
sources familiar with the initiative.
Iranian government officials and international trade sources say
Tehran wants to simplify complex trade finance arrangements
potentially worth billions of dollars, which would alleviate
pressure on the country's sanctioned banking system.
According to a joint plan of action agreed in November in Geneva,
world powers would "establish a financial channel to facilitate
humanitarian trade for Iran's domestic needs using Iranian oil
revenues held abroad".
"This channel would involve specified foreign banks and
non-designated Iranian banks to be defined when establishing the
channel," the action plan said.
Iran, with its economy under severe pressure, is keen to push this
process forward.
"We have been informed that according to the negotiations and
agreements done in Geneva, the possibility to exchange direct LCs
(letters of credit) between seven European banks and eight Iranian
banks for food, medication and humanitarian goods has been
provided," the Iranian government document seen by Reuters says,
although it made clear this was not final.
"Please note, that we can accept no legal liability regarding this
information as it remains to be officially confirmed by the
responsible authorities."
BIG BANKS
The U.S. Treasury Department and EU officials declined to comment on
specific banks.
A U.S. Treasury official said the United States is working with
banks and governments in Asia and Europe to establish mechanisms for
humanitarian trade with Iran, and multiple channels were ready for
Iran to purchase humanitarian goods.
A different U.S. official told Reuters separately that Washington
was having trouble persuading some big banks to work on the issue.
"Some banks are willing to play a part here. But not all of them.
There are a lot of big banks that have been subject to fines for
engaging in transactions that were in violation of U.S. sanctions
that aren't willing to do anything — even humanitarian," the
official said.
"They just are not willing to do business with Iran. And we are not
in a position to say, you have to."
Banks may well feel the need for caution in this area.
Regulators in New York and Washington are looking at potential
violations by France's Credit Agricole <CAGR.PA> and Societe
Generale of U.S. sanctions imposed against countries like Iran, a
person familiar with the investigation said.
In 2012 New York regulators threatened to revoke Standard
Chartered's <STAN.L> banking license after it broke sanctions on
Iran. HSBC <HSBA.L> was fined $1.92 billion by U.S. regulators for
various violations including doing business with Iran. In February,
BNP Paribas <BNPP.PA> set aside $1.1 billion for a possible fine for
breaching U.S. sanctions on countries including Iran.
Several banking sources, speaking on condition of anonymity due to
the sensitivity of the subject, said Western banks were wary of
getting involved in the latest initiative. One said banks would need
cast-iron assurances that they would not face exposure before even
considering it.
"It is only natural that banks will be cautious to what the
political world offers. It changes so quickly, as events in Ukraine
can attest," the banker said.
"What we could be looking at is very short-term financings or
involvements and structures, so you will have optionalities to exit
should anything go wrong," he added. "Banks will need more clarity."
INTERIM AGREEMENT
Iran and Western governments reached an interim agreement in
November last year over Tehran's atomic work in exchange for limited
sanctions relief for six months.
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By late July, Western governments hope to hammer out an accord that
would lay to rest their suspicions that Iran is seeking the
capability to make a nuclear bomb, an aim it denies, while Tehran
wants sanctions lifted.
Iranian government officials said the document, which has been sent
to Iran's Supreme National Security Council, tasked with
safeguarding Tehran's interests, listed the following banks as
"available for further actions": Standard Chartered Bank (London),
Societe Generale (Paris), Banque de Commerce et de Placements (BCP)
(Geneva), UniCredit Bank (Munich), Commerzbank (Frankfurt), United
Bank (Zurich) and BHF Bank (Frankfurt).
It was not clear whether these banks had been approached to
provide finance. Two business executives familiar with the
initiative said they were aware that Standard Chartered, Societe
Generale, Commerzbank were among those on the wish list.
Commerzbank, Societe Generale, United Bank and BCP all declined to
comment. A spokeswoman for Standard Chartered said the bank was not
involved and would not get involved in any transaction with any
party from Iran.
Unicredit said the group was "not aware of, and hence is not
participating in any international initiative involving financial
institutions related to Iran subsequent to the P5+1 (major powers)
accord". BHF Bank said it was "not offering or providing any
financial services with links to Iran".
Swiss and German banking regulators declined to comment, although
officials in Germany said if German banks were still rigidly
adhering to prohibitions on doing business with Iran, the government
was ready to explain that some of those restrictions were eased in
November.
"If banks in Germany apply the restrictions too rigidly and
cautiously in financial transactions with Iran, the government would
encourage them to clarify the possibilities that can be done under
the agreement, not in order to relax or change these thresholds, but
to help the banks keep in compliance with the action plan," a German
finance ministry official said.
IRAN EAGER FOR DEAL
The document also named the following Iranian banks: Eghtesad Novin
Bank, Parsian Bank, Bank Pasargad, Karafarin Bank, Sarmaye Bank,
Saman Bank, Bank Maskan and Bank Keshavarzi.
"Iranians are very eager to have this as soon as possible and teams
are working on it and all reports go to the Supreme Leader
(Ayatollah Ali) Khamenei," one senior Iranian government official
familiar with the nuclear talks said.
"It was an Iranian initiative but the other party (Western powers)
also agreed on that, though they had some internal dispute on the
list of Western banks," the official said.
"There have been some direct contacts between Iranians and various
bank officials in Europe since November (the Geneva deal) but the
final agreement needs more work and meetings."
The Iranian banks named in the document referred the issue to Iran's
central bank, which declined to comment.
A Western diplomatic source confirmed the initiative was under
discussion and Western powers saw such an arrangement as increasing
the transparency of trade deals.
"If you have Western banks, many of whom with U.S. operations,
potentially involved in such an initiative it is a better situation
than having hundreds of middle men in such trades where you cannot
track where the money is going. It also allows much stricter
governance on the part of those banks. This is the idea at least,"
the diplomatic source said.
(Additional reporting by Thomas Atkins
in Frankfurt, Matthias Sobolewski in Berlin, Silvia Aloisi in Milan,
Katharina Bart in Zurich, Steve Slater in London, Justyna Pawlak in
Brussels, Lionel Laurent in Paris, Anna Yukhananov and Warren
Strobel in Washington; editing by Alexander Smith, Giles Elgood and
Paul Simao)
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