US tells banks to shut down Iran operations

Several of the UK's largest banks fear they could face the full legislative wrath of the US government unless they bow to Washington's pressure to shut their operations in Iran.

It is believed that officials in President George Bush's administration have also put pressure on banks with operations in the US, including RBS, HSBC and Barclays, to stop acting on behalf of UK business customers in Iran. Barclays, it is thought, has already told its corporate clients that it will not accept deposits from transactions originating in Iran.

The finance director of an AIM-listed company with significant operations in Iran said: "Barclays told us that it is unable to act as our bank as far as Iran is concerned. We have not been told why." HSBC has said it will no longer accept dollar transactions from within Iran, while RBS declined to comment.

Although the UK banks involved are listed and incorporated in the UK, all have either a secondary listing or substantial operations in the US that makes them potentially vulnerable to US government action.

A senior executive at one of the banks affected said: "The consequences of not toeing the American line on Iran have not been made clear, but we were left in no doubt that we might not want to find out."

A spokeswoman for the US Treasury Department confirmed that meetings had taken place with senior UK bankers. However, she stressed that the talks had been set up so that US government officials could "equip banks with information" about the dangers of allowing Iran to remain part of the international financial community.

Business leaders in the UK have grown increasingly worried that they might fall foul of US legal or regulatory censure for actions that take place in the UK or in another country. It emerged last month that American victims of terrorist attacks were pursuing civil actions against US subsidiaries of NatWest and Crédit Lyonnais on the grounds that their parent companies provided banking facilities in the UK and France for charities that the US Treasury Department believes has links to Hamas, the militant Palestinian organisation.

The US has imposed unilateral sanctions on Iran - because of its alleged support for international terrorism - and individuals found to have breached the economic restrictions face a fine of up to $250,000 (£126,000) and 20 years in jail.