Trade between Britain and Iran is beginning to grow and the government is working to resolve banking sector concerns which are limiting further expansion, British Trade Minister Liam Fox said on Wednesday.
Fox said that Anglo-Iranian relations had improved since Britain reopened its Tehran embassy last year and that Britain would work to expand bilateral trade following Brexit, Reuters reported.
He said this was an opportunity to put UK-Iran relations on a new footing.
Despite the removal of international banking restrictions in January, Tehran has secured links with only a limited number of smaller banks as US sanctions remain in force and large foreign institutions still fear potential fines.
"Slowly but with increasing enthusiasm, British companies are starting to do business with Iran again ... We are seeing the first signs of growing trade between the UK and Iran," Fox told a City and Financial Global conference in London.
"The banking sector's ongoing concerns about facilitating payments or providing financial services mean that the benefits of sanctions relief are not yet being fully realized, resolving these problems remains a priority for this government."
Norman Lamont, Britain's trade envoy to Iran and a former British finance minister, said the deadlock over progress on banking access to Iran was "profoundly unsatisfactory".
The administration of US President Barack Obama has tried to promote deeper international trade for Iran while still limiting US business engagement due to sanctions that bar US banks from doing business with Iran and prevent transactions with Iran in dollars being processed through the US financial system.
US Secretary of State John Kerry has tried to encourage non-US banks and companies to boost trade, although he has acknowledged the tough process ahead.
Iran's Ambassador to Britain Hamid Baeidinejad said the banking problems were "highly troublesome" for Iran and said the United States was "disappointed" with the situation.
Fox said the government was working with the banking sector to find a solution for Iranian payments, and that Britain was well-placed to help private Iranian banks modernize.
The British government is prioritizing opportunities for exporters in sectors such as retail, health care, water, advanced manufacturing, mining, airports and aviation, Fox said, and will send a mining sector delegation to Tehran in December.
"Iran does remain, however, a challenging place to do business, and needs to do more to meet international banking standards and instigate reform if it is to enjoy a post-sanctions dividend," he said.