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Turkish Halkbank to continue handling Iran payments despite US sanctions

Business Materials 28 January 2012 07:36 (UTC +04:00)

Turkish lender Halkbank will continue to handle customers' oil payments to Iran as long as they comply with international, and not the US, regulations, the bank's general manager said in the wake of fresh, unilateral US and EU sanctions against Tehran, FNa reported.

General Manager Suleyman Aslan underlined that his bank is not acting illegally. He said a decision to reject an application from another Indian refiner late last year was unrelated to its trade deals with Iran.

In an interview with Reuters Aslan said decisions on whether to take business are based on banking rather than political criteria.

"We do not make any specific decision based on Iran or any other country. We have customers, and these customers approach us and we look at their transactions. This transaction may be in India, it may be in Iran it may be in another country," he said.

"If it is legitimate business, we will carry out the job within the framework of international regulations and international standard practice."

"According to the information that we are receiving now, these transactions are not unlawful," Aslan said.

"Therefore, if our customers want to continue - they can."

Halkbank's dealings with Iran drew attention last year when Indian refiners disclosed they were channeling oil payments through the Turkish bank as their own central bank had shut its payment facility, fearing US retribution.

Majority state-owned Halkbank is Turkey's sixth largest bank, based on assets, and has a representative office in Tehran.

It also processes payments to Iran by Tupras, Turkey's sole refiner and a unit of Koc Holding, the country's largest conglomerate, according to energy sector officials.

On December 31, President Barack Obama signed into law a fresh set of sanctions targeting financial institutions that deal with Iran's central bank to stem the flow of oil revenue and persuade Tehran to abandon its peaceful nuclear program.

The European Union followed with a ban on Iranian oil this week that will not take effect, at least, for the next six months.

Muslim NATO member Turkey opposed the imposition of UN sanctions on the Islamic Republic in 2010.

Turkish officials have repeatedly said there is no obligation for Turkey to enforce tougher unilateral sanctions subsequently announced by the United States and European Union.

India, according to a government official in New Delhi this week, has agreed with Iran to settle part of their annual $12 billion oil trade in rupees.

Indian state-run refiners began using Halkbank to pay Iran for imported oil in July.

In December, however, Halkbank, which is 75 percent state-owned, declined to open an account for an additional Indian refiner, Bharat Petroleum Corp BPCL.

Aslan said the decision to refuse BPCL was because it was unable to provide a satisfactory reference to Halkbank and was unrelated to concerns over doing more business with Iran.

Asked if Halkbank would consider dealing with BPCL in the future, Aslan said even with the necessary reference the bank "may still not" handle payments from the refiner and that "this will depend on the situation at the time."

US Treasury officials have visited Turkey several times to pressure banks to stop dealing with Iranian entities, but they have apparently failed in their efforts.

Turkey imports over 200,000 barrels per day, around 30 percent of its consumption, from Iran.

On a visit to Ankara this month, Iran's foreign minister projected annual trade with Turkey doubling in the coming four years to reach $30 billion in 2015, while Turkey's urbanization minister said the two countries were planning important steps to ease money transfer processes.

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