BAGHDAD: Two Iranian banks seeking to open branches in Iraq are unlikely to get government approval due to economic sanctions imposed on Tehran in a row over its nuclear program, an Iraqi central bank official said on Sunday.
Last month, Iraq’s central bank said the OPEC member was in talks with six or seven foreign banks, among them Iranian and Lebanese lenders, which are interested in entering the country despite insurgent attacks.
Among the applicants are Iranian lenders Karafarin Bank and Bank Parsian, which want to set up shop in the Iraqi capital, Baghdad, said Waleed Eedi, acting director-general of banking supervision at the Iraqi central bank.
Shi’ite power Iran has strong political and economic ties with neighboring Iraq with its Shi’ite majority.
But due to a new round of U.N. sanctions, the central bank had asked the foreign ministry and council of ministers for guidance.
"No approval has been made so far," Eedi told Reuters. "We are awaiting a reply from them (foreign ministry) and I, personally, expect that their reply will be a no."
The United Nations and the European Union have imposed new restrictions on Iran over its nuclear enrichment activities, which the West fears could lead it to make a bomb. The sanctions focus on the country’s banking and energy sectors.
Iraq is trying to attract foreign investment to develop its infrastructure and diversify the oil-dependent economy but many firms are waiting for security to improve.