Lebanon Revokes License of Iran’s Bank Saderat Amid US Pressure

Lebanon’s central bank this week revoked the local license of Bank Saderat, one of Iran’s biggest lenders, as the US raises pressure on nations to cut commercial ties with the Islamic Republic.

The move aims to “send a clear signal to the outside world that we are determined to protect our banking sector from any entity that might cause it a risk of contamination,” Lebanon’s central bank governor Karim Souaid said in an interview.

The move by Lebanon follows other regional central banks, such as the United Arab Emirates and Turkey in tightening restrictions on the Iranian financial system, and coincides with increased pressure globally from the US, the governor said.

Washington is waging a campaign to economically isolate Iran as it tries to force the Islamic Republic to agree to US conditions to end the war.

Bank Saderat is one of Iran’s oldest commercial lenders and operates several branches overseas. Last month the UK announced it would reject new license applications by any Iranian banks sanctioned by the US, including Saderat, which runs a branch near the Bank of England in the City of London.

“We saw that all other bigger, stronger economies like the UAE and Turkey have complied with such requests in order to preserve the relationship of their banks with the international financial system,” Souaid said on the sidelines of the International Monetary Fund’s annual meetings in Bangkok, Thailand. “Lebanon can’t sustain such a risk.”

“We have to take decisions sometimes that are politically sensitive because we want to protect our banking sector from any outside sanctions or outside pressure,” he said.

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Souaid said Lebanon has to exit the Financial Action Task Force’s so-called gray list for shortcomings in tackling illegal money flows and “clean up its economy from all illicit, unlawful and money laundering funds”. The central bank hired a specialized US firm to map the country’s cash economy and track any suspicious activity, he added.

Lebanon is pushing to turn the nation’s economy around from a financial collapse that resulted in the default of about $30 billion of international bonds in 2020. The country is in talks with the International Monetary Fund for a potential loan, a key step in the recovery.

“This is going to be an important issue,” Souaid said. While not part of the IMF’s conditions for a potential support package, “it is an unwritten rule that the lender and the donors who will join the program will insist on having a clean, financial sector,” the governor said.