US Sanctions Typically Keep Banks Away
While most banks typically shy away from doing business with Iran for fear of contravening US sanctions, Austrian Oberbank and Danish Danske Bank have reportedly signed deals with Iran for lines of credit.
New Lines of Credit
According to Reuters, Oberbank’s line of credit, estimated to be at EUR 1 billion, will cover Austrian companies’ projects in Iran in areas previously prohibited by sanctions such as infrastructure, hospital construction and hydropower. Oberbank Chief Executive Franz Gasselsberger stated “We negotiated with the Iranian central bank but the guarantee is evidently coming from the Iranian Finance Ministry.”
Denmark’s Danske Bank signed a deal for EUR 500 million line of credit with ten Iranian banks. Danske Bank was contacted by DCW and confirmed the agreement stating “It means that we in selected cases, where Danske Bank has ensured that co-operation with businesses in Iran doesn’t conflict with any EU or US sanctions, have the possibility to help our key business clients doing business in Iran. The framework agreement means that we can support our key business customers with longer financing for their projects in Iran.”
Will Other Banks Follow?
With the Austrian and Danish banks readying to resume business with Iran after years of US sanctions, could this be the breaking of the levy for trade finance deals? Documentary Credit World has corresponded with representatives from both Danske Bank and Oberbank, and will continue to follow this story closely. To learn more about this developing story, subscribe to DCW.