By Jonathan Saul, Parisa Hafezi and Andrew MacAskill
LONDON/ANKARA (Reuters) – The Royal Bank of Scotland
In recent months 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.
The sources said Britain’s finance ministry had tried to use the government’s influence with RBS and to a lesser extent Lloyds
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 U.S. sanctions, corruption and money laundering issues.
The British government owns 71 percent 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 percent 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.
DOLLAR TRADE CURBS
Edinburgh-based RBS was rescued with a more than 45 billion pound ($55.42 billion) bailout at the height of the financial crisis.
The government also has just under a 6 percent stake in Lloyds and is aiming to return the bank to full private ownership this year after a 20.5 billion pound taxpayer-funded rescue during global turmoil nearly a decade ago.
Iran, which has sharply stepped up oil production since sanctions were lifted, remains restricted from most dollar trades but is able to use other foreign currencies including euros and pounds.
But Tehran has struggled to get transactions processed via the UK, frustrating its efforts to boost access to London’s financial markets, which remains one of the world’s biggest sources of capital.
Iranian Deputy Foreign Minister for Europe and America Affairs Majid Takht Ravanchi expressed frustration with the slow pace of ties at a meeting in Tehran on Thursday with British Minister for the Middle East and Africa Tobias Ellwood.
Ravanchi said any progress in relations “should be based on mutual respect”.
British officials have said resolving banking issues was a “priority” for the government.
A British government spokesperson said it was committed to working closely with all parties, including British banks and industry groups, “to help open up the huge opportunities for trade between the UK and Iran”.
Banks remain nervous after U.S. penalties including a $9 billion fine on France’s BNP Paribas
U.S. sanctions, which prohibit U.S. lenders and persons from doing business with Iran, remain in place.
Major global lenders like HSBC
Donald Trump, who will be sworn in as U.S. president on Friday, has previously opposed the nuclear deal reached by his predecessor Barack Obama. But it is not clear what he will do next, adding to nervousness among many banks.
“As long as Trump’s Iran policy is unclear, I think there will not be a tangible movement from the British banks,” a second Iranian banking official said. “It seems that British banks, whether small or government-backed ones, prefer to wait before starting to do trade with Iran.”
(Additional reporting by Barbara Lewis in London, editing by Rachel Armstrong and Adrian Croft)