© Reuters. FILE PHOTO: A woman looks at her phone as she walks past a branch of Lloyds bank in London, Britain, July 20, 2018. REUTERS/Toby Melville/File Photo
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By Jesús Aguado and Iain Withers
MADRID/LONDON (Reuters) -Shares in Santander (BME:) and Lloyds (LON:) fell after the Financial Times (FT) newspaper reported that Iran used accounts held at the banks in the UK to covertly move money around the world as part of a sanctions-evasion scheme backed by Iran’s intelligence services.
Lloyds and Santander UK provided accounts to British front companies secretly owned by a sanctioned Iranian petrochemicals company based in London, according to documents seen by the FT.
Shares in Madrid-based parent Santander fell as much as 5.8% and were down 5.7% at 0936 GMT, while shares in Lloyds declined 1.8%. Santander shares rose more than 6% last week following 2023 earnings that beat forecasts.
“The market must be realising that they may be fined,” said Nuria Alvarez, an analyst at Madrid-based broker Renta 4.
European lenders, such as Unicredit (BIT:) and Standard Chartered (OTC:), have been hit with large penalties over Iran sanctions in the past, with the Italian lender paying $1.3 billion to U.S. authorities to settle probes.
Standard Chartered agreed to pay $1.1 billion in 2019 to U.S. and British authorities over financial transactions that violated sanctions against Iran and other countries.
According to the FT, the Iranian state-controlled Petrochemical Commercial Company was part of a network that the US accuses of raising hundreds of millions of dollars for the Iranian Revolutionary Guards Quds Force and of working with Russian intelligence agencies.
Both PCC and its British subsidiary PCC UK have been under US sanctions since November 2018, the FT said.
One of its alleged front companies, called Pisco UK, is registered to a detached house in Surrey and used a business account with Santander UK, the FT report said.
A person with knowledge of the situation said that Santander has closed Pisco’s account.
A Santander spokesperson said the bank declined to comment on specific client relationships.
“Santander abides by its legal and regulatory obligations, and we are highly focused on sanctions compliance,” the person said.
“Where we identify sanctions risks, we will investigate and take appropriate action.”
A Lloyds spokesperson said: “The Group’s business activities are conducted to ensure compliance with applicable sanctions laws.
“We are committed to adhering to all legislative and regulatory requirements as they relate to economic crime. We are not permitted to comment on individual customers.”
