According to Iran’s Ministry of Economic Affairs and Finance, the decision comes despite the branch’s reported financial strength, including capital of several tens of millions of euros, a solid balance sheet, and no recorded complaints from depositors or regional or international customers.
Bank Sepah argues that the branch’s inability to access banking payment systems resulted directly from sanctions imposed on Iran, rather than from a failure to meet its financial obligations. The bank maintains that an external regulatory constraint deprived the branch of access to payment and settlement networks, while the relevant supervisory authorities have declined to accept legal responsibility for the consequences of those restrictions.
According to the Iranian account, the sanctions have remained in place since September 2025 amid what Tehran describes as significant non-compliance by three European parties to the 2015 nuclear agreement, known as the Joint Comprehensive Plan of Action (JCPOA), and UN Security Council Resolution 2231. Iran says the restrictions have continued despite opposition from other parties to the agreement.
The dispute highlights how geopolitical and sanctions-related measures can affect the operations of financial institutions even when their underlying balance sheets remain sound.
Bank Sepah argues that the proposed withdrawal of the Frankfurt branch’s licence shows that a long operating history, financial soundness and adherence to banking obligations may not be sufficient to shield a financial institution from the consequences of political decisions taken by Germany’s ostensibly independent financial authorities.
The Frankfurt branch has operated for nearly five decades, making it one of Bank Sepah’s longest-standing overseas banking operations. The bank has said it reserves the right to pursue the matter through the competent judicial and legal authorities in Germany and the European Union.
Bank Sepah said the legal proceedings would seek a transparent and evidence-based examination of the grounds and circumstances behind the decision concerning the Frankfurt branch, particularly in light of its long record of operations and its financial position.
The case underscores a broader issue confronting banks operating under sanctions: whether restrictions that prevent access to payment and settlement infrastructure can themselves create the conditions later cited by regulators as grounds for restricting or terminating a bank’s operations.