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FINE

US demands billions in fines from BNP Paribas

American regulators want French bank BNP Paribas to pay over €7 billion in fines on charges it violated economic sanctions against countries like Iran and Cuba. A settlement is reportedly "weeks away."

US demands billions in fines from BNP Paribas
American regulators wants billions in fines from BNP Paribas. Photo: Eric Piermont/AFP

The US is seeking more than $10 billion (€7.35 billion) from French bank BNP Paribas to settle criminal charges it violated sanctions on Iran, Sudan and Cuba, the Wall Street Journal reported Thursday.

Citing people familiar with the negotiations between the bank and the Justice Department, the newspaper said the two sides are still locked in talks, and that BNP wants to pay less than $8 billion.

Both numbers are far higher than earlier reports of less than $4 billion, and would far outpace the $1.9 billion British bank HSBC was fined in 2012 for routinely handling money transfers for countries under US sanction and for Mexican drug traffickers.

The Journal said a final resolution of the BNP case, which related to the bank's activity in 2002-2009, is "likely weeks away."

It said the two sides are still arguing over whether the bank, as part of its punishment, will be temporarily denied the right to transfer money into and out from the United States, an important part of any foreign bank's business in the US.

The report said Justice Department prosecutors continue to press the bank to plead guilty to the charges, which theoretically could risk its US banking license.

But in a separate case last week involving a bank helping thousands of Americans avoid taxes, Switzerland's Credit Suisse pleaded g€uilty to one felony charge and was fined $2.6 billion, but was allowed to keep its banking license.

That was the first time in 20 years a major bank had been convicted on US criminal charges.

Officials of BNP, the largest publicly traded French bank, could not be immediately contacted to comment on the Journal report.

Last year it set aside €789 million ($1.1 billion) to resolve the US sanctions case.

But in its first-quarter earnings report in late April, BNP noted "a possibility that the amount of the fines could be far in excess of the amount of the provision."

In May a person familiar with the negotiations said US prosecutors were insisting that it plead guilty to charges it did business with sanctioned parties in Iran, Sudan and elsewhere; pay a large fine; and fire 12 employees involved in the transactions.

But BNP chief executive Jean-Laurent Bonnafe had expressed grave concerns to regulators and prosecutors about lodging a guilty plea, in part because it could endanger the bank's license for operating in the US, according to the source.

BNP would likely be able to absorb such a large settlement without being destabilized.

At the end of the first quarter this year, the bank had €90 billion in shareholder equity, a €264 billion liquidity reserve and a strong 10.6 percent capital ratio.

But the fine could impact shareholders. Net income for the quarter was €1.7 billion, on €9.9 billion in revenues.

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BANKING

US hits French banking giant BNP with $246 million fine

US regulators have fined French banking giant BNP Paribas $246 million for the bad behaviour of its traders.

US hits French banking giant BNP with $246 million fine
Photo: AFP

US regulators on Monday fined French banking giant BNP Paribas $246 million for poor oversight of its foreign exchange traders who manipulated trading prices.

The move came six months after the Federal Reserve permanently barred former BNP trader Jason Katz from the banking industry, for manipulating foreign exchange prices.

“The firm failed to detect and address that its traders used electronic chatrooms to communicate with competitors about their trading positions,” the Fed said in a statement.

“The Board's order requires BNP Paribas to improve its senior management oversight and controls relating to the firm's FX trading,” the statement said.

BNP said the misconduct occurred between 2007 and 2013 the company has taken steps to strengthen oversight.

“BNP Paribas deeply regrets the past misconduct which was a clear breach of the high standards on which the Group operates,” the company said in a statement.

The Fed also blocked BNP from ever re-hiring any of the former employees involved the incidents, the central bank said.

New York State's Department of Financial Services in May fined BNP $350 million for the same case, accusing traders of “collusive activity” to manipulate currency prices.

The fine also follows the Fed decision in April to fine Germany's Deutsche Bank more than $150 million for similar “unsafe and unsound” foreign exchange trading practices.