Iranian ventures feel the crunch

Dubai: A number of UAE banks have tightened their lending policy towards Iranian-owned businesses in the Emirates following the tightening of US sanctions against Iran.

Although there has not been any official change of policy by the UAE Central Bank towards Iranian businesses, most banks have started to exercise caution on lending to both companies and individuals.

"We look carefully at all aspects of Iranian-owned companies prior to offering them any facilities. In some cases we have found that some of the locally registered companies are shell companies operating on behalf of their Iranian parent companies or counterparts. In such cases we do not offer any facilities," said a banking official.

But many banks insist that they continue to do business with legitimate Iranian-owned businesses. "If the companies are registered in the UAE and are operating from here we continue to offer facilities in proportion their credit standing and our own risk assessment," said the corporate banking head of a local bank.

According to the Dubai-based Iranian Business Council (IBC) deputy president Nasser Hashempour, bilateral trade last year was about $12 billion in 2006. There are more than 9,000 Iranian companies in the UAE and about 450,000 Iranian expatriates live in the country. IBC estimates accumulated assets of Iranians in the UAE to be about $300 billion.

Official estimates by banks suggest that a huge portion of Iranian exports and imports is conducted through the UAE and the tightening of credit will impact on trade flows.