Why Foreign Banks Are Still Cautious About Dealing With Iran

Iranian president Hassan Rouhani at the Campidoglio palace in Rome, Italy, as he begins his four-day visit to Europe, January 25. Alessandro Bianchi/Reuters

LONDON (Reuters) - Iran on Thursday called on the United States to make a clear public pledge that it would not penalize European banks for legitimate trade with the Islamic Republic.

Many foreign banks are cautious about resuming trade with Iran following January's nuclear deal because they fear being caught up in ongoing U.S. sanctions.

"Rebuilding the confidence of the banks that the United States will not re-intervene in their relations with Iran may require some further assurance from the United States," Zarif said at Chatham House in London.

"We don't need any more legalese - we need clear precise assurances that banks can do business with Iran," he said. "I hope that is fast coming because if not it would be a problem of implementation."

Although world powers lifted many crippling sanctions against Iran in return for the country complying with a deal to curb its nuclear ambitions, some restrictions remain in place

Washington still prevents U.S. nationals, banks and insurers from trading with Iran and also prohibit any trades with Iran in U.S. dollars from being processed via the U.S. financial system.

This is a significant complication given the dollar's role as the world's main business currency.

European banks are also cautious - with some, including Deutsche Bank, remembering past fines from U.S. regulators for breaking sanctions,

When asked about trade with Britain, Zarif said that good economic and commercial relations could resume.

"Iran and Britain have had traditionally good commercial and economic relations and I think those can resume," Zarif said. "We need to work together on moving the political relations forward."

Iran has 9.3 percent of the world's proven oil reserves, the fourth largest after Venezuela, Saudi Arabia and Canada, and 18.2 percent of the world's natural gas reserves, bigger even than Russia's 17.4 percent share, according to the BP Statistical Review of World Energy.