The entrance to the BNP Paribas bank in Paris. (AFP)
Paris/New York, June 30 (Reuters): The US justice department is expected to announce a settlement with BNP Paribas involving a record fine of nearly $9 billion over alleged US sanctions violations by France’s biggest bank, sources familiar with the matter said.
The penalties, which the sources said may also include a temporary ban on some dollar-clearing business, could hit BNP’s dividend payout, regulatory capital ratios and its investment banking targets, analysts say.
BNP is expected to plead guilty to a criminal charge in Manhattan Federal Court and the US justice department is planning a news conference in Washington to announce a deal, sources said.
However the lender is expected to retain its banking license from the New York state banking regulator, after negotiations which, according to sources close to the matter, at one point raised the prospect of an even bigger fine up to $16 billion.
“I want to say it clearly here: we will receive a heavy penalty,” BNP chief executive officer Jean-Laurent Bonnafe told staff in an internal message sent on June 27 and seen by Reuters.
“However, the difficulties that we are currently experiencing must not affect our plans for the future.”
The bank has not commented publicly on the case since it warned shareholders on May 14 that the fine could be stiffer than the $1.1 billion for which it originally provisioned.
A BNP spokeswoman declined to comment. Shares in the group were 0.6 per cent higher at 49.660 euros in early Paris trade.
US authorities are examining whether BNP evaded US sanctions relating primarily to Sudan between 2002 and 2009, sources have said.
A $9 billion fine, not far short of BNP’s entire 2013 pretax income of about 8.2 billion euros ($11.2 billion), would be the largest penalty paid by a European bank to date for violations of sanctions imposed by the Office of Foreign Assets Control, Morgan Stanley analysts said.
BNP has only said publicly that it is in discussions with US authorities about “certain US dollar payments involving countries, persons and entities that could have been subject to economic sanctions”. Last month it said it had improved control processes to ensure mistakes did not occur again.
French President Francois Hollande has appealed to his counterpart Barack Obama to ensure any penalty is fair and does not have repercussions for Europe’s economy. Obama has replied that it is purely a matter for the judiciary.
EU internal market commissioner Michel Barnier said it was normal that any breach of rules be punished.
“That’s exactly what we do over here if a US company does not respect European rules,” Barnier, a French national, told France Info radio, noting 2013 penalties imposed by EU anti-trust regulators on Microsoft for breaking competition rules.
The investigation of BNP operations has turned up billions of dollars of transfers involving the bank that specifically violated US sanctions, one source has said.
Bonnafe inherited a bank that emerged relatively unscathed from the economic crisis.