Japan’s Banks Restrict Loans to Iran

Japan’s private sector banks have restricted loans to Iran and rejected a request to pay for oil imports in currencies other than dollars, the Financial Times quoted banking and official sources as saying.

Bank of Tokyo-Mitsubishi UFJ, Mizuho Financial Group Inc. (8411.T: Quote, NEWS , Research) and Sumitomo Mitsui Financial Group Inc. (8316.T: Quote, NEWS , Research) had informed the Iranian authorities in April they would not conduct new business in Iran, the FT said, quoting a senior banker.

The move follows U.S. pressure on banks and energy firms to avoid doing business with Iran, which has the world’s second-largest oil and gas reserves but needs foreign cash and expertise to develop them.

The banker said the banks’ action followed pressure from Washington and reflected a hardening line toward Iran by Shinzo Abe, Japan’s prime minister.

The banker and a Japanese energy official said that in April, Iran had proposed to Japanese trading houses that they pay for Iranian oil in non-dollar currencies, the FT reported.

Trading companies declined to stop paying in dollars after consulting the Japanese government, the banker was quoted as saying. The energy official denied government influence, saying it was a private sector matter.

The FT said Tokyo-Mitsubishi confirmed it had stopped a part of its Iranian businesses, but would not say which. Mizuho said it was doing “very very little” Iranian business, but would not confirm any decision to stop business. It said it ran potential Iranian business past Japan’s foreign ministry.

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