After more than a decade of casting the Islamic Republic as a rogue power seeking to sow turmoil through the Middle East, Britain has sought to improve ties with Iran, whose proven natural gas reserves are as vast as Russia's.
"In the first instance, we will want to ensure that the nuclear agreement is a success, including by encouraging trade and investment once sanctions are lifted," Hammond said.
Under the nuclear deal, sanctions imposed by the United States, European Union and United Nations will be lifted in exchange for Iran agreeing long-term curbs on a nuclear program the West suspected was intended to make a nuclear bomb. Tehran has always denied seeking nuclear arms.
Hammond told Iran's central bank governor, Valiollah Seif, that British banks, mindful of penalties imposed in the past by US authorities, wanted to ensure that they were fully compliant when they return to Iran.
"There is a huge appetite both on the part of our commercial and industrial businesses to engage with the opportunity of Iran opening up and there is huge appetite on the part of our financial institutions to support that activity but of course it has to be done in the proper way," he said.
Seif said the countries had had positive ties in the past and could build on them.
While the nuclear deal is seen as a major opportunity by some, including US President Barack Obama, hardliners in Washington and Tehran have opposed it, as has Israel.
Deep mistrust remains on both sides.
Britain has been cast for decades by opponents inside Iran as a perfidious "Old Fox" or "Little Satan" who does the bidding of "Big Satan," the United States.
An electronic newsletter of the Fars news agency cast the reported re-opening of the embassy as the "Return of the Fox".
Following the 2011 storming, which was a protest against nuclear-related sanctions imposed by London, Iranian Supreme Leader Ayatollah Ali Khamenei called it an "evil embassy".
Protesters in 2011 smashed the large stone lion and unicorn on the gates at the ambassadorial residence, where in 1943 a dinner was held for Winston Churchill, Joseph Stalin and Franklin D. Roosevelt during the first meeting between the leaders of Britain, Russia and the United States to discuss their strategy for winning World War Two.
Protesters also looted the embassy and smashed some treasures. A portrait of Queen Victoria was torn in two, the head was cut out of a portrait of Edward VII and a picture of Queen Elizabeth was stolen.
There has been no US embassy in Tehran since it was sacked in the early days of the Islamic Revolution in 1979 by students who feared a repeat of a 1953 coup when the CIA orchestrated the overthrow of Prime Minister Mohammad Mossadegh.
The US hostage crisis lasted 444 days and Washington and Tehran have never resumed diplomatic relations, leaving Britain first in line for the anti-Western feelings of the hardliners who run the Islamic Republic and their supporters.