Asharq Al-Awsat, London – Bahrain’s largest lender by market value, Ahli United Bank (AUB), has suspended business with Iran, complying with US pressure to isolate Tehran over its nuclear activities, two sources familiar with the matter said.
Two sources with knowledge of policy at Ahli United said banking activity with Iran had been “frozen”. The sources declined to comment on how this would affect the bank’s affiliate Future Bank, set up in 2004 with two Iranian partners.
A member of the Bahrain parliament’s finance and economic committee, Jasim Ali, said this week the government was putting pressure on Ahli United to freeze its Iranian operations.
Future Bank was established as a joint venture with Bank Saderat Iran and Bank Melli Iran.
The bank’s main business is wholesale investment banking, and it targets financial flows between Iran and the Gulf. The bank aims to channel debt and equity capital from the Gulf into Iran, Future Bank’s website said.
The US, which counts Bahrain as an ally and has a naval base on the island, is putting pressure on Gulf governments to isolate Iran, which it says is trying to make nuclear weapons. Iran denies the charge.
A US intelligence report in December said Iran had halted its nuclear weapons program in 2003. Iran says it is developing nuclear technology for energy purposes.
Banks in the UAE, the second-largest Arab economy, have stopped issuing letters of credit to Iranian companies, bankers said.
Increasingly isolated from the West, Iran has long had close economic ties with most Gulf states, especially the UAE and Bahrain, home to the Middle East’s biggest financial centres.
An official from Bank Saderat Iran spoke with Asharq Al-Awsat commented on this development by saying that AUB’s decision was a “political” one and added that pressures on the bank had been increasing since 2006. He stated that although the bank’s profits had not been detrimentally affected in 2007 and that they had in fact increased; however, he added that the bank’s activities have been affected since 2006 due to US pressure.
Speaking to Asharq Al-Awsat, an American official stated that Washington wanted banks in the Gulf to follow the same course as their European counterparts, which are taking steps to decrease their activities with Iran. This move corresponds to the application of the Security Council’s decision to impose sanctions on Iran, which also coincides with an American accountants’ report that states that the impact of these economic sanctions is “unclear” on foreign companies.
In a written statement issued from his office, Under Secretary of the Treasury for Terrorism and Financial Intelligence (TFI) at the United States Department of the Treasury Stuart A. Levey said that Iran “was facing increasing economic, financial and political isolation,” and that 25,000 business ventures with Iranian companies worth US $5 billion had been rejected since 1997.