UBS cuts ties with 'unattractive' Iran

UBS started reconsidering its position with Iranian clients late last year. Credit Suisse is also looking at its relationship with Iran. Picture / Reuters

ZURICH - Swiss bank UBS is cutting ties with all of its clients in Iran because the business is "unattractive".

The move comes as a global conflict over the country's nuclear policy is heating up.

High costs deriving from uncertainty about security and regulatory matters in Iran meant the business was no longer worth continuing, a spokesman said yesterday. The decision was not political.

"We started to exit customer relationships with counterparties in Iran in autumn last year," UBS spokesman Serge Steiner said. UBS is the world's largest asset manager and its decision will be closely watched by rivals.

"This holds true for all our business units and for all UBS's regions around the world," he added.

Iran faces referral to the UN Security Council for possible sanctions, after failing to convince the world its atomic programme is peaceful, and the country said on Friday it was moving foreign holdings out of Europe.

But Iran's Foreign Ministry yesterday denied any currency had been transferred to shield funds from possible UN sanctions, contradicting previous statements from central bank Governor Ebrahim Sheibani.

Credit Suisse, Switzerland's second-biggest bank, also indicated it was considering terminating relationships with Iran.

"We are closely looking at the developments and we're increasingly worried," a spokesman said.

Iranian clients hold 1.4 billion Swiss francs ($1.6 billion) in assets in Swiss banks, according to central bank data. Most of that money is with the country's two biggest banks, UBS and Credit Suisse.

Both UBS and Credit Suisse had declined to comment on Friday about their relationships with clients in Iran.

Separately, a source close to UBS said it was also severing relationships with clients in Syria, which was blamed by the UN for the killing of a Lebanese politician last year. UBS declined to comment.

Steiner said the decision to pull out of Iran had been made because high compliance costs were not likely to be outweighed by benefits from business.

But he rejected the idea that UBS had made the decision in order to protect ties with the United States, where it does a huge part of its business.

"It's not a political decision. It's purely a business decision that is taking many factors into account."

Switzerland hosts the world's largest wealth-management industry for foreign clients.

Financial markets have reacted nervously to the uncertainty about Iran's foreign holdings, estimated at more than US$30 billion ($44.7 billion).

Analysts have said it was unclear what Iran would gain by transferring money to other foreign accounts, which would be equally subject to UN measures.

- REUTERS