* Iran's Bank Mellat says some Turkish banks halt activities
* Other Turkish banks could step in
* Bank Mellat says U.S. applied pressure to Turkish banks
By Evrim Ergin
ISTANBUL, Sept 14 Several Turkish banks with close ties to the European Union and the United States have halted financial trade with Iran due to United Nations sanctions though others could step in, according to Iran's Bank Mellat.
Younes Hormozi, chairman of Bank Mellat's Turkish unit, told Reuters that Bank Mellat Turkey had dealt with a higher number of transactions since Turkish banks halted activities.
He said his bank had approached new potential banking partners in Turkey, but had still to hear their response.
Led by Washington, new sanctions imposed in July target financial services and Iran's energy sector, making international transactions harder and hitting Iran's ability to import gasoline and secure foreign investment.
The measures are aimed at pressuring Tehran to curb nuclear activities which the West fears might be aimed at making a bomb. Iran says its atomic ambitions are purely peaceful.
NATO-member and EU candidate Turkey has improved ties with neighbouring Iran in recent years and Turkey, along with Brazil, pulled together a last minute uranium-swap deal in June that was aimed at quelling fears over Tehran's nuclear ambition.
"Businessmen can still make their transactions," Hormozi told Reuters. One of the biggest problems they faced however was the inability to send money from Iran to Europe, for which they needed Turkish banks' mediation in providing euros.
Turkish banks acted as settlement banks and exchanged currency.
"What we suggest is trading with Turkish lira instead of the euro. We expect trade to be made in Iranian currency and lira," he said.
Banking sources say trade between the two countries in local currencies is "possible" but still "too soon".
Turkey's highly profitable banks weathered the financial crisis largely unscathed. Foreign banks rushed to enter the Turkish market several years ago to tap the country's strong economic expansion and young growing population. Turkey also has several participation banks.
Hormozi said an American delegation visiting Turkey had warned banks about taking sides, prompting some banks to pull out of Iranian transactions.
Hormozi said there had been no pressure placed on banks from the Turkish government and the banks had taken the decision independently.
The U.S. government wants all banks to refrain from dealings with Iran, but Hormozi said that many banks continued to trade with Iranian banks. (Editing by David Cowell)