France Foresees Fairer BNP Settlement as U.S. Talks Progress

Jun 15, 2014 4:59 pm ET

(Updates with stock performance this year in ninth paragraph.)

June 15 (Bloomberg) -- BNP Paribas SA, France’s biggest bank, may secure a better-than-expected settlement with the U.S. for alleged dealings in countries including Iran and Sudan, French Finance Minister Michel Sapin said.

“I think we’ve progressed toward more equitable sanctions,” which won’t overly burden the bank’s future and its lending abilities, Sapin said in an interview on Europe 1 radio and i-Tele today.

The Justice Department and Benjamin Lawsky, New York’s top banking regulator, were said to be seeking more than $10 billion in fines, a guilty plea and the suspension of BNP’s dollar- clearing operations to settle the investigation. As the world’s reserve currency, dollars are used internationally in trades of goods ranging from oil to airliners.

Sapin didn’t provide an estimate when asked whether the fine would be less than $10 billion, saying BNP Paribas should be allowed to help finance growth in the French economy. Carine Lauru, a spokeswoman for the company, declined to comment.

A $10 billion penalty may exceed this year’s earnings, estimated at 5.64 billion euros ($7.6 billion) by analysts. It also would represent more than three times the combined fines paid by HSBC Holdings Plc, Standard Chartered Plc and ING Groep NV in 2012 for sanctions violations.

French President Francois Hollande and his finance and foreign ministers have said that such a large penalty may increase opposition to a free trade agreement being negotiated between the U.S. and the European Union. BNP Paribas should be treated fairly, Michel Barnier, the EU commissioner for financial services, said on June 13.

Dollar Trades

A suspension of the company’s right to clear dollar trades might disrupt markets and hamper lending at a time when the ECB is trying to get more funding to the economy, Bank of France Governor Christian Noyer has also said.

The threat to suspend dollar clearing is “something that can put in danger the good functioning of the international financial system because BNP Paribas is a big player in this area,” Noyer said on BFM television June 11. “I hope if there are sanctions in this area, they are limited in a way that is not dangerous.”

BNP Paribas shares have slid 2.9 percent since Bloomberg News reported the size of the proposed fine on May 29, citing a person familiar with the matter. The Bloomberg Europe Banks & Financial Services Index climbed 0.7 percent since the report and the benchmark Stoxx Europe 600 Index rose 0.8 percent. The bank’s stock is down 9.1 percent this year.

BNP Paribas said on June 12 that co-Chief Operating Officer Georges Chodron de Courcel is stepping down, becoming the first senior executive to leave as U.S. regulators sought to punish the bank. Lawsky had pressed for the dismissal of Chodron de Courcel, 64, along with about 12 other BNP employees as part of the settlement, a person familiar with the matter said this month.