Financial News

  • 30 June 2014, 17:49

BNP Paribas Fine To Be Announced In US Court

French bank BNP Paribas is expected to be hit with the biggest ever fine against a European bank later today, stemming from violations of United States law.

The US Justice Department will reveal the settlement, believed to total almost $9bn (5.3bn), at a Manhattan Federal Court.

Sources have hinted that the penalties may also include temporary bans on some US denomination foreign exchange activity.

BNP Paribas, which is France's largest bank, is expected to be hit with a reduced dividend, lowered investment bank earnings and tighter capital ratios as a result.

The bank is set to plead guilty so that it can continue operations in the US, and retain its New York state banking licence.

The US Justice Department is planning a news conference in Washington to reveal further details of the offences, which are believed to relate to activity primarily with Sudan between 2002 and 2009.

On June 27, BNP chief executive officer Jean-Laurent Bonnafe sent staff an internal memo warning of a "heavy penalty".

He added: "However, the difficulties that we are currently experiencing must not affect our plans for the future."

The bank originally planned for a fine of around $1.1bn (645m) but the expected fine almost matches its 2013 full-year pre-tax income of $11.2bn (6.6bn).

French President Francois Hollande appealed directly to US President Barack Obama over penalties being fair and proportionate, however Mr Obama said it was a matter for the courts.

Legal action against BNP was taken over breaking sanction rules stipulated by the Office of Foreign Assets Control.

The bank has seen its share value drop by around a fifth this year, after it made an allowance for a $1.1bn (650,000) fine.

It is expected to be given six months to pay the fines, to allow it to implement restructure plans.

In 2012, HSBC paid more than $1.9bn (1.1bn) in penalties for violations over sanctions and secrecy law, in what was then a record fine.

HSBC was found to have allowed Mexican drug cartels launder hundreds of millions of dollars inside the US.

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