Banks will hesitate to enter Iran

Author: Danielle Myles | Published: 30 Jul 2015

The removal of sanctions against Iran is expected to commence next year, and would benefit local banks almost immediately.

But foreign financial institutions would be slower to take advantage, due to stringent internal compliance procedures and the continuation of US sanctions that fall outside the scope of this month’s historic nuclear agreement.

"The nuclear deal is just a nuclear deal – it is to prevent a nuclear weapon, but everything else is very much the same," said BBVA economist Marcial Nava Ponce.

"Even though this would revive economic activity in Iran, I think that foreign companies and in particular financial services firms will be very, very cautious in how they start doing business again in the country," he added.

Foreign banks that do want to re-enter the Middle East’s second biggest economy may have a hard time convincing local authorities. But they could have an advantage because the country’s fragmented...