The gnomes are reducing their risks:
ZURICH (Reuters) - Swiss bank UBS is cutting ties with all of its clients in Iran because the business is unattractive, a spokesman said on Sunday. 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, the spokesman said. The decision was not driven by political motives, he added.
"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 U.N. 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 on Sunday flatly denied that any currency had been transferred to shield funds from possible U.N. sanctions, contradicting previous statements from central bank Governor Ebrahim Sheibani.
Credit Suisse, Switzerland's second-biggest bank, also indicated on Sunday that 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 ($1.09 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 the world's sixth-largest bank was also severing relationships with clients in Syria, which was blamed by the U.N. for the killing of a Lebanese politician last year. UBS declined to comment.
UBS's Steiner said that the decision to pull out of Iran had been made after finding that high compliance costs were not likely to be outweighed by benefits it expected from business with clients in the country.
But he rejected the idea that the world's sixth-largest bank had made the decision in order to protect ties with the United States, where it does a huge part of its business and which is one of Tehran's fiercest opponents in the global political arena. "It's not a political decision. It's purely a business decision that is taking many factors into account," he said.
Switzerland hosts the world's largest wealth-management industry for foreign clients and is considered a safe haven for clients in countries where political or regulatory instability bars them from putting their money into a local bank.
Financial markets have reacted nervously to the uncertainty about Iran's foreign holdings, estimated at more than $30 billion, with Switzerland and Lebanon mentioned as safe havens.
Analysts have said it was unclear, however, what Iran would gain by transferring money to other foreign accounts, which would be equally subject to U.N. measures.