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Belgium-based SWIFT (Society for Worldwide Interbank Financial Telecommunication) did not specify which “certain Iranian banks” it was referring to in its disconnection announcement. The move came as a disappointment to those trying to protect Iran’s trading activities, particularly given the potential disruption the loss of the system could cause to supplying the country with basic foods, medicine and other humanitarian shipments .
Iran’s central bank has claimed the SWIFT disconnection will “have no effect on Iran’s bank accounts and its foreign exchange settlements since it is “only an interbank messaging system”. Its governor Abdolnasser Hemmati told reporters that the regulator had made preparations for the disconnection, but did not explain what alternatives to the system would be employed.
8.1.6 Bank news
Iran’s Bank Mellat strikes ‘secret deal’ with UK Treasury to receive out-of-court financial settlement
India’s IDBI Bank opens Iran trade processing centres in three cities
The CEO of Iran’s Bank Mellat has said the bank has struck a secret deal with the UK Treasury on how to receive an out-of-court financial settlement of $1.6bn damages claim made after a dispute over alleged links of the lender to the Iranian nuclear development programme, ILNA reported on June 25.
Mohammad Bigdeli reportedly said the bank, Iran’s largest private lender, would not reveal how it will receive the undisclosed amount of funds from the UK, and added: “We do not want to receive goods instead of compensation.” Financial payments to Iran are hindered by the US sanctions regime that constrains the Islamic Republic.
The settlement means that Bank Mellat can say it brought the first case of its type successfully resolved to the benefit of an Islamic Republic-backed commercial entity in the UK.
Bank Mellat, 20% owned by the Iranian government, with the remainder privately held, contended that sanctions imposed on it in 2009 damaged its reputation and goodwill in the UK and internationally, causing significant losses. The sanctions forced the bank to wind down its UK operations.
Six years ago the UK Supreme Court ruled that the sanctions were unlawful. The then government had been “irrational” and “disproportionate”, the court said, referring the case back to the High Court.
The UK Treasury issued a statement, reading: “Bank Mellat’s claims have been concluded on terms confidential to the parties.”
India’s state-run IDBI Bank has opened three centres for processing Iranian trade in Indian cities, the Economic Times reported on April 28. Under its unprecedented sanctions regime imposed on Iran, Washington has demanded that all buyers of Iranian oil stop their purchases by May 1. India, Turkey and China are the three countries most affected by the removal of oil waivers as part of Washington’s maximum pressure campaign against Tehran. "IDBI Bank will shortly start setting up processing cells in Delhi, Ahmedabad and Kolkata. The bank already has a centre in Mumbai. The Indo-Iran trade settlements can be done at any of IDBI's branches, and these three centres will be the processing units," a senior bank source reportedly said.
"Direct payments can be routed through the Iranian banks when a trader checks out with his IDBI Bank account number,” they added.
According to the new Iranian-Indian jointly controlled mechanism, Iranian banks will open “Vostro” accounts with IDBI Bank in India, and payments by Indian importers will be deposited into those accounts in rupees.
In turn, Iran is expected to purchase products and items from India in rupees to
29 IRAN Country Report July 2019 www.intellinews.com