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International Relations

Japan banks to freeze Iran dealings to avoid Trump sanctions

Lenders like MUFG and Mizuho may cut off transactions as early as August

In May, President Donald Trump signed an executive order announcing the U.S. withdrawal from the Iran nuclear deal.   © Reuters

TOKYO -- MUFG Bank and Mizuho Bank aim to halt all transactions connected to Iran as early as August, seeking to cut exposure to pending sanctions ignited by President Donald Trump when he pulled the U.S. out of the 2015 nuclear accord with the Middle Eastern country.

The Mitsubishi UFJ Financial Group and Mizuho Financial Group units have begun notifying clients of the change. In May, Trump announced he would withdraw from the nuclear deal, which also includes the U.K., France, China, Russia and Germany. Washington looks increasingly likely to follow through on its stated intent to reinstate some penalties on Iran after a 90-day grace period, which expires in early August.

The prospect of sanctions pressed some Japanese banks to halt trading with Iran, even as many had expanded such dealings in recent years. A full-on freeze could even harm other economic activities by Japanese businesses. But time remains to avert that scenario if the governments in Tokyo, Washington and Tehran can make diplomatic headway.

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