Iran's biggest oil tanker operator NITC is in talks with French bank BNP Paribas over the repayment of hundreds of millions of dollars in loans using Iranian funds held in South Korea, sources familiar with the matter told Reuters.
NITC, a major transporter of Iran's crude exports to world markets in addition to other international business, lost its ship insurance cover from European providers earlier this year due to sanctions aimed at pressuring Iran to curb its work on nuclear enrichment.
The Islamic Republic says the programme is for peaceful purposes, but Western countries suspect Tehran wants to develop the ability to build a nuclear weapon.
NITC, the leading player in Iran's main method of transport for international trade, has also faced calls to pay back bank loans. Major western banks normally require shipping customers to have western insurance for vessels as a condition of the loans.
The talks show the increasing financial complexities faced by Iranian companies in doing business abroad.
“Even where Iranian entities manage to still do business legitimately, they are having serious difficulties either closing deals or even simply repatriating payments when they have been made -- at which point the whole reason for engaging in commerce is obviated,” said J. Peter Pham, with the Atlantic Council, a U.S. think-tank.
“When even significant foreign financial institutions have to devote considerable resources to just getting their money, the cost of doing business will eventually become more than it is worth. This is apparently the strategy which the Obama administration is pursuing,” he added.
NITC, which was founded in 1955 and fully privatised in 2000, is owned by three Iranian pension funds. The company said in June it had secured ship insurance cover mainly in Asia and also in Iran after European providers pulled out.
NITC has said it is not on any list of companies targeted by the U.N., U.S. or EU and is “not engaged in, nor has it been accused of, any prohibited activities".
One of the sources said BNP Paribas, France's biggest listed bank, wanted its money back because of concerns over the euro zone financial crisis.
The French bank said it does not comment on this type of subject. An NITC official said he was not aware of the issue, while another NITC official said, "We are OK for now", and declined to comment further.
The sources told Reuters that Iran's central bank, NITC and BNP Paribas were in discussions over a proposed repayment of the loans that would partly use money held in an account at South Korea's government-owned Woori Bank, denominated in Korean won.
"The Iranian central bank has already asked Woori Bank for cooperation in paying back some part of loans via its won account," one of the sources.
"Because of euro zone debt problems, European banks, including BNP Paribas, want to get rid of risk assets," the source added.
A trade source said Woori was not lending Iran any money to repay BNP Paribas. "The money in that account is won-denominated money which belongs to the Iranians -- it’s not a loan," the source said.
The Central Bank of Iran in Tehran could not immediately be reached for comment.
TANKER PLAYER
The trade embargo has meant Iran could have nearly $5 billion worth of cash trapped in South Korea by the end of the year as sanctions prevent it from repatriating money from oil sales, sources told Reuters in August. [ID:nL3E7J405E]
"I heard considerable progress had been made in discussions among those involved ... such as BNP Paribas, the South Korean finance ministry and Korea Trade Insurance Corp,” another source said.
"It doesn’t need an official Korean government approval, as far as I know, but there are some procedural issues that BNP Paribas and Iran may need to clear out."
The third source said state-run Korea Trade Insurance Corp was the equivalent of a loan guarantor for Iran’s NITC as part of financial support for Korean shipbuilders. NITC said last year it had a number of tankers under construction in South Korea and China.
Spokesmen at Woori Bank and Korea Trade Insurance said they were not aware of the issue.
A finance ministry official in charge of foreign exchange policy said he had no knowledge of such discussions, adding that no government approval is needed for such a commercial transaction.
NITC, previously known as the National Iranian Tanker Company, is highly regarded in the global shipping industry as a major player.
The company has a fleet of around 42 oil tankers with Malta and Cyprus flags, data on NITC’s website showed. Deliveries of new tankers, scheduled between 2011 and 2013, will make NITC one of the world’s biggest tanker operators, its website said.
A report published by the United Nations nuclear agency last week, which contained what it said was credible evidence pointing to military dimensions to Iran's atomic activities, fuelled demands in Washington and Europe for more sanctions on Tehran and increased talk of using military strikes to prevent it from getting the bomb.
NITC, a major transporter of Iran's crude exports to world markets in addition to other international business, lost its ship insurance cover from European providers earlier this year due to sanctions aimed at pressuring Iran to curb its work on nuclear enrichment.
The Islamic Republic says the programme is for peaceful purposes, but Western countries suspect Tehran wants to develop the ability to build a nuclear weapon.
NITC, the leading player in Iran's main method of transport for international trade, has also faced calls to pay back bank loans. Major western banks normally require shipping customers to have western insurance for vessels as a condition of the loans.
The talks show the increasing financial complexities faced by Iranian companies in doing business abroad.
“Even where Iranian entities manage to still do business legitimately, they are having serious difficulties either closing deals or even simply repatriating payments when they have been made -- at which point the whole reason for engaging in commerce is obviated,” said J. Peter Pham, with the Atlantic Council, a U.S. think-tank.
“When even significant foreign financial institutions have to devote considerable resources to just getting their money, the cost of doing business will eventually become more than it is worth. This is apparently the strategy which the Obama administration is pursuing,” he added.
NITC, which was founded in 1955 and fully privatised in 2000, is owned by three Iranian pension funds. The company said in June it had secured ship insurance cover mainly in Asia and also in Iran after European providers pulled out.
NITC has said it is not on any list of companies targeted by the U.N., U.S. or EU and is “not engaged in, nor has it been accused of, any prohibited activities".
One of the sources said BNP Paribas, France's biggest listed bank, wanted its money back because of concerns over the euro zone financial crisis.
The French bank said it does not comment on this type of subject. An NITC official said he was not aware of the issue, while another NITC official said, "We are OK for now", and declined to comment further.
The sources told Reuters that Iran's central bank, NITC and BNP Paribas were in discussions over a proposed repayment of the loans that would partly use money held in an account at South Korea's government-owned Woori Bank, denominated in Korean won.
"The Iranian central bank has already asked Woori Bank for cooperation in paying back some part of loans via its won account," one of the sources.
"Because of euro zone debt problems, European banks, including BNP Paribas, want to get rid of risk assets," the source added.
A trade source said Woori was not lending Iran any money to repay BNP Paribas. "The money in that account is won-denominated money which belongs to the Iranians -- it’s not a loan," the source said.
The Central Bank of Iran in Tehran could not immediately be reached for comment.
TANKER PLAYER
The trade embargo has meant Iran could have nearly $5 billion worth of cash trapped in South Korea by the end of the year as sanctions prevent it from repatriating money from oil sales, sources told Reuters in August. [ID:nL3E7J405E]
"I heard considerable progress had been made in discussions among those involved ... such as BNP Paribas, the South Korean finance ministry and Korea Trade Insurance Corp,” another source said.
"It doesn’t need an official Korean government approval, as far as I know, but there are some procedural issues that BNP Paribas and Iran may need to clear out."
The third source said state-run Korea Trade Insurance Corp was the equivalent of a loan guarantor for Iran’s NITC as part of financial support for Korean shipbuilders. NITC said last year it had a number of tankers under construction in South Korea and China.
Spokesmen at Woori Bank and Korea Trade Insurance said they were not aware of the issue.
A finance ministry official in charge of foreign exchange policy said he had no knowledge of such discussions, adding that no government approval is needed for such a commercial transaction.
NITC, previously known as the National Iranian Tanker Company, is highly regarded in the global shipping industry as a major player.
The company has a fleet of around 42 oil tankers with Malta and Cyprus flags, data on NITC’s website showed. Deliveries of new tankers, scheduled between 2011 and 2013, will make NITC one of the world’s biggest tanker operators, its website said.
A report published by the United Nations nuclear agency last week, which contained what it said was credible evidence pointing to military dimensions to Iran's atomic activities, fuelled demands in Washington and Europe for more sanctions on Tehran and increased talk of using military strikes to prevent it from getting the bomb.