• English Site
• >Business
• >Iran
• >

  Twisting Arms: US Pressures Germany to Cut Iran Business Ties

Twisting Arms US Pressures Germany to Cut Iran Business Ties

By Ralf Beste, Christoph Pauly and Christian Reiermann

Part 2: German Banks Wind Down Business with Iran

Deutsche Bank was joined by other large international financial institutions including HSBC, Bank of Tokyo and Credit Suisse. Understandably upset by the potential damage to their reputations, Lawrence Uhlick from the Institute of International Bankers appealed to US Treasury Secretary Paulson in a letter on July 6. "It is also a matter of concern that information provided by a company in good faith pursuant to its understanding of its disclosure obligations under the federal securities laws would then be presented to investors in a manner that can be significantly misleading and unfairly prejudicial," Uhlick wrote.

In fact, Deutsche Bank, like many other financial institutions, has declared that it is systematically attempting to reduce its dealings in the countries in question. But it and the other banks were still put on the list. Uhlick said that put them at a real disadvantage since investors might unfairly judge them to be breaking the law.

The terror list has since been taken down from the SEC Web site, but it can still be easily found on the Internet. And banks fear nothing more than losing their good reputations -- all the more so if it is unjustified.

Anyone wishing to do business in the United States or hoping to attract US investors had best tread softly when it comes to Iran. Germany’s Commerzbank stopped financing trade with Iran in US dollars in January, after the Americans piled on the pressure. The bank’s share of financing business with the mullahs has since dropped considerably, but the German bankers are still relieved.

And the German state-backed KfW IPEX Bank is quick to stress that it hasn’t acquired any new deals with Iran for the past two years. It is just winding up old loans worth a few hundred million euros.

It is becoming difficult for German exporters to do business with Iranian customers in dollars, which is why the Iranians are closing more deals denominated in euros. The Iranians are redirecting part of their foreign exchange revenues toward Germany and Iran’s central bank is also said to have deposited some of its funds in Germany. According to statistics from the Germany's Central Bank in May German financial institutions were holding Iranian assets worth €6.55 billion. That’s around the same level as deposits from economic powerhouse Japan. The Americans suspect every single penny of the Iranian money could be used to fund terrorism. Reason enough for Levey to pay Germany’s biggest bank, Deutsche Bank, a visit.

The bank has an office in Tehran and is one of the biggest financers of euro-denominated deals with Iran. But not for long. Deutsche Bank told the American during his visit that it plans to quietly wind down its business with Iran. Officially, the Frankfurt-based bank does not want to comment on the matter, other than pointing out that its dealings with Iran make up only 0.1 percent of its total turnover.

But Deutsche Bank also told several of its customers in Iran on July 20 that it was ending their “business ties due to more important business and political reasons” on Sept. 14 this year. The reasons were not personal, the bank said, but the angry customers complained they were being discriminated against simply because of their nationality.

German importers and exporters will also have to find a new bank for their trade with Iran. But banks that don’t do much business with the US are supposedly already lining up to fill the gap. After German financial institutes stopped handling dollar-denominated deals early this year, Austrian and Swedish banks jumped in. They’ll soon be able to mop up even more German business.

For reasons of data protection and privacy, your IP address will only be stored if you are a registered user of Facebook and you are currently logged in to the service. For more detailed information, please click on the "i" symbol.

Post to other social networks:

• 
• 
• 
• 
• 
• 
• 
• 
•