Royal Bank of Scotland 'Rejects UK Government Pressure to Deal with Iran'

The Royal Bank of Scotland has so far rejected pressure from the UK government, which is a major shareholder in the bank, to encourage dealings with Iran, as it still considers transactions with that country to be risky. According to Reuters, following the referendum on the UK's exit from the European Union, the government is seeking to expand and establish new trade relations globally, and after the lifting of international sanctions, it wishes to develop its economic relations with Iran as well. A source familiar with the negotiations stated that the UK Treasury, relying on its shareholding and consequent influence in the Royal Bank of Scotland and somewhat in Lloyds Bank, has attempted to expedite financial transactions between these two banks and Iran, including providing services to Iranian banks in sterling. Despite the lifting of international sanctions related to nuclear programs, including the removal of the ban on Iran's access to the international banking system, many major European banks still avoid dealing with Iran. A senior Iranian banking official said that Iranian officials have had several meetings with British officials in recent months. He added, 'We asked British officials to help remove these obstacles. We were promised that the UK government would work to convince its banks, including the Royal Bank of Scotland and Lloyds, to deal with Iran. However, since then, no real change has occurred.' A British official stated that the government is aware of the complexities of banking relations with Iran, and British banks consider factors such as other US sanctions against Iran, financial corruption, and money laundering. Reuters reminds that the UK government owns 71% of the Royal Bank of Scotland, although its management is with the financial investments department of the country, which is tasked with ensuring the institution operates based on commercial necessities. A knowledgeable Western official also stated, 'The UK government cannot decide on financial risks; it is merely a shareholder. The decision on the level of risk tolerance for a bank is not up to the shareholders.' A member of the board of the Royal Bank of Scotland also said, 'This bank is not inclined to trade in the Middle East' and focuses on the UK and the Republic of Ireland, from which it earns about 90% of its profits. A spokesperson for Lloyds Bank also stated that this institution is a commercial bank focusing on the UK market and added, 'We consider that dealing with a country like Iran still poses many risks.' Despite the lifting of sanctions related to nuclear activities, Iran is still barred from accessing the US banking system or using the dollar in foreign transactions due to other US sanctions. However, it can conduct transactions or attract foreign investment using other currencies, including the euro and pound. Nevertheless, Iran has yet to secure currency transfers within the UK banking system and remains deprived of access to the London financial market, one of the largest sources of capital in the world. Majid Takht-Ravanchi, Iran's Deputy Foreign Minister for American and European Affairs, expressed the Iranian government's dissatisfaction with the delay in opening banking transactions with the UK during a meeting with Tobias Ellwood, the UK government’s Middle East and Africa affairs official. He added, 'Any progress in relations must be based on mutual respect.' British officials have stated that resolving banking issues in relations with Iran is one of the government's 'priorities.' A government spokesperson said that the UK government is committed to working with all stakeholders, including British banks and industrial companies, 'to open up tremendous opportunities in trade relations with Iran.' It seems that Donald Trump's hardline positions, or at least ambiguity in the future US government's policy towards Iran, are influential in this regard. An Iranian banking official told Reuters, 'As long as Donald Trump's government policies regarding Iran remain unclear, I don't think any British banks, including smaller ones or those in which the government is a shareholder, will make significant decisions regarding dealings with Iran.'