The Iranian central bank has decided to stop using its trade settlement accounts at two Korean banks amid disputes over the interest rate.

The Central Bank of Iran said it informed Woori Bank and the Industrial Bank of Korea of its decision and asked the Seoul government to find other banks where it can open new Korean won-denominated accounts.

The CBI is eyeing NH Nonghyup and the Export-Import Bank of Korea, according to financial sources here.

Minoo Kiani Rad, vice governor of the CBI, told Korean diplomats in Iran on Tuesday that the bank would no longer use the won-denominated accounts at Woori and IBK, sources said.

The CBI opened won-denominated trade settlement accounts with Woori and IBK in 2010 as the U.S. restricted financial companies around the world from doing business with the Middle Eastern country. The U.S. sanctions are aimed at making Iran give up its nuclear program.

Korean exporters have used those accounts to trade with Iran since then. The interest rate for the accounts was set at 0.1 percent.

The Iranian central bank has called on Woori and IBK since early last year to let it open fixed deposit accounts with an interest rate of 3 percent and put most of its deposits there.

Woori and IBK said they have not yet been officially informed about the CBI’s decision to close the accounts, and were in talks to draw up an offer for negotiation as early as later Thursday.

About 5 trillion won ($4.42 billion) is estimated to be held in the CBI’s accounts at the two state-run banks.

Kiani Rad visited Seoul early this month and urged the Korean government to mediate in its spat with the two state-owned banks.

“We are in talks with both the Iranian central bank and the Seoul government about the matter as continued conflict (with Iran) would negatively affect Korean exporters,” a Woori Bank official said.

“Raising the interest rate requires consideration of many factors including the account managing costs. We have to check if each transaction violates the sanctions on Iran. Since the deposits are huge, higher interest rates could also be seen as an excessive outflow of national wealth.”

By Kim So-hyun (sophie@heraldcorp.com)