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Hefty fine for BNP Paribas

July 1, 2014

A US court has fined France's BNP Paribas for breaking US sanctions, with the bank agreeing to suspend some activities. France's banking regulator has said it believes BNP to be capable of taking the financial hit.

BNP Paribas Bank in Paris - epa04186283 (FILE) A file photo dated 14 September 2011 showing a general view of the logo outside a branch of French bank BNP Paribas, Paris. France's biggest bank BNP Paribas risks a fine 'far in excess' of 1.1 billion dollars for a possible breach of US sanctions, the group said 30 April 2014. Presenting its first-quarter results, BNP said there was 'a high degree of uncertainty' around the amount of the fine it faced in the US over dollar payments to countries such as Iran, Sudan and Cuba that are subject to US sanctions. 'There is the possibility that the amount of the fines could be far in excess of the amount of the provision (of 1.1 billion dollars made in the fourth quarter of 2013),' the bank said. EPA/IAN LANGSDON +++(c) dpa - Bildfunk+++
Image: picture-alliance/dpa

The banking regulator of New York state said on Monday that BNP Paribas would pay $8.9 billion (6.5 billion euros) after pleading guilty to violating US trade sanctions on behalf of clients in Cuba, Iran and Sudan.

BNP agreed to pay the sum to settle the charge after months of negotiations in the largest such sanctions case to have been brought by the US Justice Department.

According to the charges, transactions were made through BNP's New York office between 2004 and 2012 - thwarting US sanctions aimed at blocking sanctioned states' access to the global financial system.

"BNP Paribas went to elaborate lengths to conceal prohibited transactions, cover its tracks and deceive US authorities," said Attorney General Eric Holder. "These actions represent a serious breach of US law."

In addition BNP will have to suspend part of its US dollar clearing operations for a year, beginning from January, as part of the conditions for not revoking its license. During the suspension - an unprecedented punishment - the bank would be unable to convert foreign currencies to dollars on the behalf of clients for as long as a year.

At the request of US authorities, the bank - the largest in France by capitalization - also agreed to sever ties with a number of employees, including two senior executives.

France's bank supervisory authority APCR said in a statement that it had previously examined the liquidity and solvency of France's largest bank and found it to be "quite solid," and that it would be able to "absorb the anticipated consequences."

The authority's chief, Christian Noyer, who is also the governor of the Bank of France, had traveled to New York during the negotiations, during which he warned of the consequences of a hefty fine on the French financial system. The French government also warned that a disproportionate fine could affect transatlantic trade agreement negotiations.

BNP shares have plummeted by 17 percent since the company first announced in mid-February that the fine could reach $1.1 billion.

rc/lw (AFP, AP, Reuters)