Iran General NewsBoA Merrill drops client due to Iran link-sources

BoA Merrill drops client due to Iran link-sources

-

ImageReuters: Bank of AmericaMerrill Lynch has dropped Dubai state-controlled Dragon Oil as a client because of its ties with Iran, sources close to the matter said, in a sign the United States may be using its clout with bailed-out banks to achieve foreign policy goals.

By Tom Bergin and Douwe Miedema

ImageLONDON, Aug 17 (Reuters) – Bank of AmericaMerrill Lynch has dropped Dubai state-controlled Dragon Oil as a client because of its ties with Iran, sources close to the matter said, in a sign the United States may be using its clout with bailed-out banks to achieve foreign policy goals.

Dragon Oil said on Monday that BoA Merrill Lynch, an investment banking unit of Bank of America, the beneficiary of a $45 billion state bailout, was no longer advising it on ongoing takeover talks.

"Merrill Lynch have had to relinquish the mandate following an internal issue with Bank of America," a spokesman at Dragon said.

A spokeswoman for Merrill said the bank had withdrawn for "internal legal reasons". She declined to elaborate, but said there had not been an issue with Dragon itself.

Dragon is now being advised by HSBC, a global bank with headquarters in Britain.

Sources close to the matter said the reason was that Dragon has ties with Iran, which Washington accuses of seeking to build an atomic bomb.

"Merrill had to give it up because of the Iran link," one source said.

Dragon produces oil in Turkmenistan and routes 90 percent of its production through Iran to international markets. It does not have oil or gas fields in Iran.

U.S. sanctions prohibit U.S. companies from investing in Iran or advising Iranian companies but it is unclear what law Merrill could have broken by advising a company which simply buys and sells oil with Iran, analysts said.

"This is a sign the is U.S. being more aggressive … It seems the U.S. is using its stakeholdings to execute foreign policy," one analyst, who asked not to be named, said.

IMPLICATIONS

The U.S. government has extended $45 billion in bailout funds to Bank of America Merrill Lynch — none of which has been paid back — and is perceived as having broad influence in its governance, having overseen a board shake-up.

Merrill Lynch witnessed an exodus of dealmakers at the start of the year after Bank of America took it over in a deal that was closed under pressure from U.S. regulators, but lately started snapping up some senior officials.

In the past, oil companies with operations in Iran, such as Royal Dutch Shell Plc and Norway's StatoilHydro have had no difficulty in securing advice or funding from U.S. investment banks.

Merrill's withdrawal could have implications for the energy trading units of U.S. banks that have received taxpayer help, because many of their counterparties will trade in crude from Iran, one of the world's biggest producers.

Dragon Chief Executive Abdul Jaleel Al Khalifa said he was not concerned about the U.S. sanctions.

"It has been there for many years and we lived through it," he told Reuters in a telephone interview.

However, he added that Dragon, which is majority-owned by Dubai-state owned Emirates National Oil Company, could market its crude through other channels if the Iran option was closed to it. "We have a plan B in place," he said.

Citigroup Inc, which has a large energy trading unit, and is active in advising oil and gas companies, said late July it will give the U.S. government a 34-percent equity stake as part of the latest federal bailout.

The U.S. has been stepping up the pressure on Iran to drop its nuclear programme by trying to make it hard for the country to do business internationally. Even non-U.S. companies have been pressed not to trade with Iran.

The U.S. Senate last month voted to ban firms that sell gasoline and other refined oil products to Iran from also receiving Energy Department contracts to deliver crude to the U.S. Strategic Petroleum Reserve.

(Editing by Sitaraman Shankar)

Latest news

Political Corruption in Iran, Increasing Number of Secret Parliament Sessions

With the presence of the Iranian regime’s new government, which has become a collection of the most vicious elements...

Protests Will Only Expand As Iran’s Economic Conditions Worsen

As the economic conditions in Iran worsen day by day, Iranian citizens, young and old, from across the country...

Iran: Countdown and Alarm of Youth and Hunger People’s Riots

“What the Ministry of Energy (i.e., Iran’s regime) has done to the people of my region, Genghis Khan did...

Poverty Level in Iran Is So Severe, It Has Encompassed the Middle Class

With the state of the economy in Iran, it is no wonder that more and more people have fallen...

500,000 Unemployed Engineers, While China Builds Housing in Iran

Since mid-2019 and especially since spring 2020, along with the increase in housing prices and building materials, Iran is...

Protests Held in Ahvaz and Isfahan by Frustrated Retirees and Pensioners

As the social and economic crises continue to ravage Iran, in the cities of Ahvaz and Isfahan groups of...

Must read

Rumsfeld: Iran sending Revolutionary Guards to harm Iraq

Iran Focus: London, Mar. 07 – United States Secretary...

Iran’s top brass says destruction of “Zionism” in sight

Iran Focus: Tehran, Iran, Nov. 01 – The Chief...

You might also likeRELATED
Recommended to you