The Iranian economy is starting to feel the sting of banking sanctions applied by the US to pressure Tehran over its controversial nuclear drive and its support of what Washington sees as terrorist groups, according to a recent report.

The report prepared by the Agence France Presse (AFP) news agency includes comment from an Iranian businessman who says his business activities are being curtailed because he cannot obtain letters of credit (L/Cs).

No more dollars

The US has blacklisted Iran's three main banks - Bank Melli, Bank Mellat and Bank Saderat - and has also successfully encouraged most major European banks to cut business links with the Islamic republic.

"It is no longer possible to wire money by dollar into Iran and for the payments in euro there are just three European banks. They could stop cooperating with us at any moment," according an anonymous official at Iran's Export Development Bank who AFP said it spoke to.

No European banks

"Practically all the major European banks have ceased their cooperation with Iran," the official reportedly said.

Global banking giants such as HSBC, UBS and Credit Suisse were the first to sever ties with Iran last year. Financial institutions such as Deutsche Bank, Commerzbank and BNP Paribas have followed suit this year.

Scarce L/Cs

Foreign banks, that were already refusing to accept L/Cs issued by their Iranian counterparts, are now apparently refusing to carry out even simple operations such as money transfers to Iran.

"We wanted to import equipment to construct prefabricated houses but the Australian banks refused to accept L/Cs," an Iranian businessman who preferred not to give his name reportedly told AFP.

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