The judicial clouds over BNP have been gathering for months.
Pablo Porciuncula/AFP—Getty Images
By Geoffrey Smith
June 23, 2014

BNP Paribas (BNPQY) is close to an agreement with U.S. authorities to settle investigations into possible violations of sanctions for between $8 billion and $9 billion dollars, according to media reports over the weekend.

The Wall Street Journal said BNP would plead guilty, likely in early July, to violating U.S. sanctions on countries including Sudan and Iran, and would agree to dismiss over 30 key employees involved in the criminal transactions, although it noted many of these have left the bank already.

As part of its penalty, it will also lose its right to transact in U.S. dollars for a few months, the WSJ said.

BNP didn’t immediately respond to requests for comment.

The New York Department of Financial Services had indicated previously that it would not permanently revoke BNP’s banking license permanently if it pleaded guilty, according to Reuters.

As such, the penalties fall short of the worst-case scenario for France’s largest bank, and well short of the maximum penalty that it could have faced. U.S. law allows fines of up to double the volume of illegal payments involved, and the WSJ reported that the final stages of the investigation had focused on $30 billion of payments, mainly to Sudan in the years up to 2007.

The French government has lobbied the U.S. to reduce the penalty, which was initially estimated at over $10 billion. Foreign Minister Laurent Fabius called that figure “not reasonable” and “unjust”, but President Barack Obama said earlier this month he wouldn’t intervene in a judicial process.

Some European bankers have grumbled that U.S. authorities are singling them out for heavier punishment, having failed to satisfy public pressure in bringing Wall St to book after the 2008 crisis. BNP’s reported settlement is far larger than the $1.9 billion imposed on U.K.-based HSBC Holdings plc (HBC) in 2012 for helping Iran to avoid sanctions, but is still less than JP Morgan Chase Inc. (JPM) paid to settle claims related to its role in inflating the bubble in mortgage-backed securities that exploded in 2008.

BNP said two weeks ago its chief operating officer, Georges Chodron de Courcel, will step down early, although it made no connection to the sanctions case. Chodron de Courcel had run the bank’s Swiss office, which had processed many of the transactions now being investigated by the U.S. authorities. He has not been accused of wrongdoing.

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