Iran bank hit hard by U.N. sanctions: diplomats
BERLIN (Reuters) - U.S. sanctions have hit the European operations of Iran's Bank Sepah hard, despite Tehran's contention the penalties have had little impact and initial U.S. concern they did not go far enough, Western diplomats say.
In March the U.N. Security Council imposed a second round of sanctions on Iran for refusing to suspend a nuclear program the West fears is aimed at making bombs.
Penalties included the freezing of foreign assets of 28 Iranian individuals and entities, including Bank Sepah.
Iran denies it is developing nuclear weapons and says its atomic ambitions are limited to generating electricity. Tehran also says the U.N. sanctions are having a minimal impact.
Iranian Foreign Minister Manouchehr Mottaki told U.S. National Public Radio last week: "In today's world, the instrument of sanctions is no longer effective."
But European and U.S. officials say Bank Sepah, which a senior U.S. Treasury Department official described as "the financial linchpin of Iran's missile procurement network", is struggling to survive the stranglehold of U.N. sanctions.
"The U.N. sanctions have seriously hurt the bank in Europe," a diplomat told Reuters, citing financial intelligence gathered by his country. He estimated that Bank Sepah's total commitments amounted to over $4 billion.
It was not immediately possible to verify that figure or get any specifics on the balance sheet of the parent bank in Tehran. Iranian officials in Tehran had no immediate comment.
"This bank is under serious pressure," another diplomat told Reuters. He also requested anonymity due to the sensitivity of the issue.
Other diplomats confirmed that one or more of the bank's European branches in Frankfurt, Paris, Rome and London were struggling under the sanctions, which required the freezing of assets and a halt to commercial transactions unless special permission is obtained to carry them out.
All four branches refused to provide details about their current financial situation.
"WE'RE NOT NEAR COLLAPSE"
However, an official at Bank Sepah International Plc (BSIP), Bank Sepah's fully owned subsidiary in London, told Reuters life had not been easy since the U.N. sanctions were imposed on the bank. But he dismissed the idea that BSIP was teetering.
"We're not on the verge of collapse," said Liam Brennan, BSIP compliance officer. "We're limited in what we can do."
He added he could only speak for BSIP, not for the other Bank Sepah branches. Continued...
