Banks Wrestle With Iran Sanctions Move

Britain's biggest banks are to set up a high-level panel to navigate the removal of western sanctions against Iran amid continuing US opposition to some foreign economic engagement with Tehran.

Sky News has learnt that the British Bankers' Association (BBA) has agreed to form a working group to examine the implications of the sanctions move.

The decision to establish the group was reached at a BBA board meeting last week, according to industry sources.

The working group's creation comes as UK banks come under pressure from the Government to expand links with Tehran ahead of a trade visit to Iran led by Sajid Javid, the Business Secretary, which is due to take place next month.

But sources said that many BBA members, which include UK-headquartered and international banks with operations in Britain, had expressed unease about forging closer ties with Iran.

Jes Staley, the Barclays (LSE: BARC.L - news) chief executive, responded to a letter from David Cameron earlier this year on the issue in which he referred to "the considerable divergence in both approach and intention between the EU, which is taking a positive approach towards Iran, and the US, where primary sanctions remain in place, thereby prohibiting US individuals or entities from engaging directly or indirectly in business related to Iran".

The Prime Minister had accused Barclays of operating "in opposition to the policy of the UK Government" by declining to process customers’ payments from Iranian entities.

UK-based exporters have complained that they have already slipped behind their competitors from France, Germany and Italy because of a lack of support from the British Embassy in Tehran, which reopened last year, having been closed since 2011

Lord Lamont, who has been appointed as the Prime Minister's trade envoy to Iran, acknowledged that the UK was trailing its European rivals.

"Britain suffered a bit because the Government not only enforced sanctions but actively discouraged even legal trade while sanctions were in place, the result was that British trade collapsed by much more than that of Germany, France, Italy," he told Sky News in an interview in February.

"Even America has exported more to Iran recently than we have."

The anxiety among some London-based bankers stems from both US lenders and American executives who work for British and other international companies.

Banks including Standard Chartered (BSE: 580001.BO - news) have been fined heavily for sanctions breaches in recent years.

The BBA declined to comment.