Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Iran tensions alarm IBK, Woori Bank
Industrial Bank of Korea (IBK) headquarters in Seoul / Courtesy of IBK
By Park Jae-hyuk
By Park Jae-hyuk
The Industrial Bank of Korea (IBK) and Woori Bank are keeping a close eye on the aftermath of Iran's Islamic Revolutionary Guard Corps' seizure of a Korean-flagged oil tanker in the Strait of Hormuz for alleged environmental and chemical contamination, the banks said Tuesday.
Their reaction came after speculation was raised that the Middle Eastern country's latest action was mostly intended to regain access to its oil export revenue, which has been seized here over the past two years, following Washington's economic sanctions.
Both Woori and IBK said no updates have been made on Iran's frozen accounts since the vessel's seizure.
IBK said the government has the right to use the funds in the frozen accounts as the state-run lender's largest shareholder is the Ministry of Economy and Finance.
“We are not aware of which ministry is assigned to handling the accounts,” an IBK spokesman said.
Woori declined to confirm whether it has had any talks with the Korean or Iranian governments over the frozen accounts after the ship was seized. The commercial bank remained quite cautious about the issue to avoid getting dragged into a diplomatic dispute with both Iran and the United States.
In the past, Korea and Iran were able to have transactions with each other using Korean won-based settlement accounts that the Central Bank of Iran (CBI) had opened at IBK and Woori.
The Korean banks, however, had to stop providing their won-denominated settlement services in May 2019 after Washington terminated sanctions waivers given to Korea and seven other countries. If the banks make transactions with Iran or relevant businesses, it can also face sanctions in the U.S.
A few days before the vessel seizure, Iran-South Korea Joint Chamber of Commerce Chairman Hossein Tanhaee proposed using the money in the frozen accounts to import COVID-19 vaccines. He claimed the amount of Iran's blocked assets in Korea was somewhere between $8 billion and $8.5 billion.
Earlier last month, CBI head Abdolnaser Hemmati wrote on Instagram that the Korean banks holding frozen Iranian assets have refused to guarantee the transfer of funds to the COVAX facility for fear that such funds will be seized by the U.S. COVAX refers to the global initiative to ensure rapid and equitable access to coronavirus vaccines for all countries, regardless of income level.
Seoul has already resumed the won-based trade of medical and agricultural products with Tehran so that the country could import face masks and protective equipment to fight the spread of the virus.
Despite such efforts, the Iranian authorities said last year they might file a lawsuit against the Korean banks, alleging Woori has demanded they pay a maintenance fee and the Korean government has already used the money.
The commercial bank has denied the claim, saying it has continued paying some interest on Iran's deposits without demanding any maintenance fees, so that the CBI can get its principal back with interest when the U.S. lifts its sanctions against Iran.