News Column

Paribas, US close to agreement

June 16, 2014

PARIS: France's finance minister said yesterday that talks between BNP Paribas and US authorities over a potential fine for the bank for breaching US sanctions had progressed towards a "more equitable" level.

US authorities - five of them in all, including the New York financial regulator - are investigating whether BNP evaded American sanctions against Iran and other countries between 2002 and 2009.

BNP may have to pay a fine of about $10 billion (R107bn) and face other penalties, such as being suspended from clearing clients' dollar transactions, sources have said.

The French government has said that such a fine would be "disproportionate". Asked if the fine was going to be less than $10bn, Finance Minister Michel Sapin said on Europe 1 radio and news channel iTele: "I think we have made progress towards more equitable penalties that do not impede in a strong way the future and the future of funding in particular."

Sources familiar with the matter said last week that negotiations had gathered pace recently.

BNP Paribas declined to comment.

A $10bn fine would wipe out BNP's projected earnings for this year and put the bank's dividend under pressure, Societe Generale analysts estimated last month.

It would also hit BNP's core equity tier one ratio, a measure of a bank's ability to endure stress and market shocks, forcing it down about 100 basis points from the current 10.6 percent, the analysts said.

Sources familiar with the matter say the American authorities are trying to establish whether the French bank stripped out identifying information from wire transfers so they could pass through the American financial system without raising red flags.

"What is being criticised by the US authorities is the violation of a strictly American law.

"The same acts committed in France in euros would not have been reprehensible," said Sapin, pictured.

"That said, it is the American law; it should have been respected." - Reuters

Cape Argus

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Source: Cape Argus (South Africa)

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