Wednesday, April 30, 2014

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 -

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