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BNP Paribas hunkers down, plans dividend cut ahead of U.S. settlement

BNP Paribas (BNP), the France-based bank, intends to cut its dividend and sell billions of euros in bonds as it looks to a $9 billion settlement with the U.S. government.

The U.S. investigation targeted the bank for alleged violations of sanctions in its dealings with Iran, and the multibillion charge would be a significant hit to BNP’s capital ratios.

Reports say the bank will plead guilty to criminal charges and pay a $9 billion penalty to state and federal authorities.

The bank doesn’t intend to issue any new shares to build up its capital, instead it will dramatically reduce or eliminate dividend payments to investors, The Wall Street Journal said.

BNP has paid a dividend every year since at least 1998, and last year investors received $2.04 a share. The biggest loser from the dividend cut would be Belgium, which owned 10.3% share of the bank as of Dec. 31 and received about $261 million in dividend payments for 2013.

The settlement is expected to be announced on Monday and both parties are working to iron out the details in the coming days.

On top of that, New York’s financial regulator may suspend the bank’s ability to transact dollar-clearing activities, which will target the bank’s trade-finance unit that is at the heart of the sanctions-violation charges. The suspension, which would be the first of its kind for a global bank, would be phased in over several months.