Iran Financing at Austria's Oberbank 'On Hold' Because of Trump

A new report in Austria's Die Presse confirms that Oberbank, one of the first Western banks to sign a deal to provide project finance to Iran, has put projects “on hold” due to the uncertainties surrounding the Iran nuclear deal.

Oberbank, Austria’s seventh-largest bank despite its regional focus and limited exposure to the U.S. financial system, had signed an agreement to extend a EUR 1 billion line of credit to Iran in September of last year. The deal was announced to much fanfare as political uncertainty increased around the expectation that President Donald Trump would “decertify” the nuclear deal later that October—a step the American leader did subsequently take.

The finance deal, which was signed with the express support of Iran’s central bank as well as the Austrian government, was intended to support capital-intensive infrastructure and energy projects led by Austrian companies and was earmarked for projects of over two years in duration. While Oberbank has long provided trade finance in areas that are exempt from sanctions, such as food and pharmaceuticals, the provision of project finance was considered a significant boost to Iran’s engagement with the European financial system. Denmark’s Danske Bank signed a similar agreement shortly after their Austrian peers. 

However, in a presentation to shareholders by Oberbank CEO Franz Gasselsberger, the Iran project emerged as a rare blemish in an otherwise strong annual report. As Die Presse reports, Gasselsberger told those present that the financing of projects in Iran remains “on hold” because the current U.S. policy "complicates the business massively.” Moreover, the prospect that secondary sanctions could “snapback” on May 12 if Trump refuses to reissue key sanctions waivers was highlighted as something the bank’s leadership will need “take a close look at.”

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