PARIS: Western companies have been rushing into Iran for a part of post-sanctions business action but European banks, still reeling from punitive US fines over links to the country, are waiting on the sidelines until they feel it is safe to do business with Tehran.

“Sanctions have been lifted but really things are still not very clear,” a source at a major French bank told AFP on condition of anonymity.

US and French interpretations on the current state of play are “not aligned”, the source said. “We shall not be taking any new initiative in this domain.”

The sealing of a nuclear deal with world powers has ushered Iran in from the diplomatic deep freeze, opening the door to a raft of lucrative new partnerships.

France has already hailed a new era after welcoming Iranian President Hassan Rouhani, who sealed a host of post-sanctions deals last week on a visit to Paris, the headliner the purchase of 118 Airbus aircraft.

But when it comes to what oils the wheels, high finance, there is hesitation, at least on the part of European banks.

“The hefty fines levied on these financial institutions during the sanctions has made them particularly wary,” Farhad Alavi, a lawyer specialising in trade issues including sanctions, told AFP from Washington. “European banks are not only confronted with potential sanctions risks, but also other exposure points under international banking regulations and practices,” Alavi added.

Prudence is the watchword for bankers who have had their fingers burned before in the shape of swingeing fines handed down by US regulators.

The Elysee Palace says France has agreed deals worth upwards of $15 billion with the Islamic Republic. Yet the nitty gritty of how the investments will be drawn up and financed requires hands-on banking. In the past, some banks were too pro-active towards Tehran and saw Washington extract a heavy price for violating the old sanctions regime.

The most spectacular example, which is still on every banker’s mind, was a record $8.9bn fine imposed on BNP Paribas in 2014.

The issue is also taxing banking minds elsewhere in Europe, including Germany.

“Deutsche Bank has noted the easing of American and European sanctions against Iran,” said a spokesman for the German giant which last November took a $258 million fine for doing business with US-sanctioned entities including Iran and Syria.

“Until further notice the group will stick to its decision and not undertake Iran-linked business,” the Deutsche spokesman insisted.

Published in Dawn, February 4th, 2016