The fine reportedly sought by the Justice Department on France’s largest bank BNP Paribas (BNPQY) is “unjust” and poses a “serious threat”, French foreign minister Laurent Fabius said Tuesday.
In an interview with the TV station France 2, Fabius hinted that France could obstruct progress on a far-reaching new US-EU trade deal if the US authorities pressed ahead with what he called a “disproportionate” and “unilateralist” action. “If there has been an error or a violation, it’s normal for it to be punished,” Fabius said.
“But the punishment has to be proportionate and reasonable. Those figures aren’t reasonable.” Fabius’ comments add to the rising political outcry in France over a Wall Street Journal that the DOJ is seeking to fine BNP Paribas $10 billion, and maybe strip it temporarily of its license to handle US dollar payments, for helping its clients to avoid US sanctions on dealing with Iran, Sudan and Cuba between 2002 and 2009.
Central bank governor Christian Noyer is already on the record as saying that BNP’s actions in the period were in line with French and European rules.
Fabius said that such a fine, if levied, could have “a considerable negative drag effect and if Paribas’ capital was diminished, that means fewer loans, notably for French companies.” BNP had total shareholder equity of $127 billion at the end of the first quarter, but has only set aside just over $1.5 billion for damages from the case.
Reuters reported Monday that the issue would be raised in talks between Presidents Francois Hollande and Barack Obama when they meet later this week to commemorate the 70th anniversary of the D-Day landings in Normandy.
It’s not unusual for a French government to back its national champions, and French banks have been conspicuously successful in defending themselves against tighter regulation since the financial crisis. However, there was widespread reaction on French social media to a Socialist’s government apparent willingness to defend one of the world’s largest banks against charges of money-laundering.
“Fabius is trying to put pressure on the States by tying the BNP case to the transatlantic (trade) treaty,” Gaullist lawmaker Marius Condret, a member of the opposition UMP party, said on Twitter. “He wants to sell the European economy to save BNP Paribas.”
