Bank Mellat Not Interested in Barter Deal With UK Treasury

EghtesadOnline: Bank Mellat is not willing to barter its damage claims after winning a lawsuit against the UK Treasury in exchange for goods, CEO of the bank said.

News ID: ۷۴۷۶۸۶

26 June 2019

“We are not after bartering the (financial) claims with goods. As such conditions to do not demand that we receive goods instead of the money,” Mohammad Bigdeli said, ILNA reported.

On June 18, the UK government made a last minute deal to settle a £1.3billion ($1.6 billion) damages claim made by an Iranian bank over a UK trading ban.

Mellat’s lawsuit had initially claimed $4 billion (£3.2billion) against the treasury, but that figure was later reduced to $1.6 billion plus interest, Financial Tribune reported.

Bank Mellat is 80% privately owned, with the Iranian government holding a 20% stake.

Bigdeli added that the settlement deal reached with the UK government is “confidential” and details would be released after all issues related to the deal are finalized.

“The deal could be cancelled if its details are released without coordination,” he noted.

With the US sanctions taking a toll on Iran’s economy that have particularly targeted the key banking sector, there is concern about how Tehran can and will use the indemnity.

“The manner of transfer of money is clarified in the deal,” the CEO emphasized without giving further details.

Possible Hurdles

Although the bank is not subject to sanctions by the UK or EU, Iran will likely face hurdles transferring the money given that SWIFT- a major international paying system- decided to remove Iranian banks from its network last November under mounting pressure from Washington.

According to media reports, the British government has so far spent £35 million defending the claim and entered into an out-of-court deal with the bank to avoid further losses.

In 2009, the treasury in London alleged that the Tehran-based bank was involved in financing firms involved in Iran’s nuclear program – allegations that the bank denies – and imposed sanctions on Bank Mellat.

The settlement comes six years after the UK supreme court ruled that the sanctions were unlawful and that the government’s response had been “arbitrary and irrational” and “disproportionate”.

Bank Mellat argued that the 2009 sanctions substantially damaged its reputation and goodwill both in the UK and internationally and caused significant pecuniary loss.