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BNP Paribas expects heavy US sanctions, admits 'mistakes'

Photo: AFP

BNP Paribas is set to be “heavily sanctioned” by US authorities probing the bank’s dealings with blacklisted countries, CEO Jean-Laurent Bonnafe has warned employees, while admitting “mistakes were made”, a French TV channel reported on Saturday.


“I want to say it clearly, we are going to be heavily sanctioned,” broadcaster iTele quoted Bonnafe as saying in an internal message posted on June 27.

“Malfunctions have occurred and mistakes were made. But this difficulty we are experiencing should not impact our roadmap.”

The ongoing US probe is examining whether BNP deliberately hid $30 billion worth of transactions with companies and government agencies in Iran, Sudan and Cuba between 2002 and 2009 that directly violated US sanctions against those countries.

Sources this week said the French bank is expected to plead guilty to a federal criminal charge and pay nearly $9 billion as part of a larger settlement with multiple enforcement authorities that could be announced as early as next week.

“This is good news for all teams and for our customers,” iTele quoted Bonnafe as saying regarding the imminent settlement.

“This will help remove current uncertainties in our group. This will allow us to turn the page on these events.”

Raising funds

BNP Paribas is likely to be suspended from converting foreign currencies to dollars on behalf of clients in some businesses for as long as a year, sources familiar with the matter said this week.

The bank has said publicly only that it is in discussions with US authorities about “certain US dollar payments involving countries, persons and entities that could have been subject to economic sanctions”.

It has set aside $1.1 billion for the fine but told shareholders it could be far higher than that. Last month it also said it had improved control processes to ensure such mistakes did not occur again.

BNP plans to lower its dividend and raise funds by selling billions of euros of bonds next week, the Wall Street Journal reported on Saturday.

Analysts have already bet on a cut in BNP dividends and some, such as Deutsche Bank, factored in a zero dividend payout for 2014 in their forecasts for BNP, based on a $9 billion fine.

That would help the French bank maintain its core equity Tier 1 ratio at close to 10 percent.

“At the time of the announcement, I will address each and every one of you,” iTele cited Bonnafe as saying.

“It is my responsibility to tell you what happened, what lessons we have learned and, especially, how we will look ahead to the future."


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