BNP Paribas Warns Sanctions-Busting Fines Likely To Top Amount It Set Aside

BNP Paribas Warns Sanctions-Busting Fines Likely To Top Amount It Set Aside

By Sneha Shankar

on April 30 2014 7:57 AM



French bank BNP Paribas SA (OTCMKTS:BNPQY) warned Wednesday that it may

have to pay much more to cover sanctions-busting fines in the U.S. than

the $1.1 billion it set aside last year to cover the matter.



BNP Paribas faces criminal charges from U.S. federal prosecutors for

allegedly doing business with countries subject to U.S. sanctions, such

as Iran, Sudan and Cuba, a person with knowledge of the matter told Reuters.



The warning from Paribas comes as other global banks face mounting legal

woes from investigations into a string of alleged misdeeds, including

fixing benchmark interest rates and manipulating foreign-exchange

markets. JP Morgan Chase & Co. (NYSE:JPM) agreed to pay $13 billion in

2013 over mortgage-related charges, while HSBC Holdings Plc (NYSE:HSBC)

agreed to pay $1.9 billion to settle a multiyear U.S. criminal probe

into money-laundering lapses.



"There is uncertainty with respect to the amount and the nature of

penalties the U.S. will impose," Lars Machenil, chief financial officer

of Paribas, France's largest bank, told Reuters. "It's not impossible

that the fine is far in excess of the ($1.1 billion) provision."



Credit Suisse Group AG (NYSE:CS) also faces criminal charges. The

Switzerland bank has been the subject of a U.S. criminal probe since

2011 into whether it helped Americans evade taxes, Bloomberg reported,

citing sources.



Representatives for both BNP Paribas and Credit Suisse have declined to

comment on the probes, the reports said. BNP Paribas ADRs trade on the

over-the-counter market in the U.S.



The U.S. may also prohibit Paribas from conducting dollar clearing in

New York, a process which helps to settle and clear transactions

quickly. Individual employees also face penalties, Reuters reported.



"The risk is that some form of operational sanction may undermine the

bank's ability to meet these targets," Keefe, Bruyette & Woods analyst

Jean-Pierre Lambert said, according to Reuters. "There does not seem to

be a serious likelihood that BNP will lose its banking license outright,

but there may be consequences for its current activities if its ability

to clear U.S. dollar transactions is limited."



BNP Paribas said its net income rose 5.2 percent to 1.67 billion euros

($2.31 billion) in the first quarter.



Source: BNP Paribas Warns Sanctions-Busting Fines Likely To Top Amount

It Set Aside -

http://www.ibtimes.com/bnp-paribas-warns-sanctions-busting-fines-likely-top-amount-it-set-aside-1578285