BNP warns U.S. fine may 'far exceed' $1.1 billion provision

BNP warns U.S. fine may 'far exceed' $1.1 billion provision

French bank BNP Paribas (BNPP.PA) has warned it might be hit with a fine far in excess of the $1.1 billion (652.29 million pounds) that it set aside last year to cover litigation costs linked to potential breaches of U.S. sanctions on countries including Iran, Reuters reported on April 30.

The warning from France's biggest bank comes as the global banking industry faces mounting legal woes due to investigations into a string of alleged misdeeds, including fixing benchmark interest rates and manipulating foreign-exchange markets.

A big U.S. fine could have ramifications for BNP beyond the immediate financial hit, as the bank is targeting expansion in North America as a key plank of a new strategy to raise revenue and profits outside traditional European markets.

"There is uncertainty with respect to the amount and the nature of penalties the U.S. will impose," Chief Financial Officer Lars Machenil told Reuters Insider television. "It's not impossible that the fine is far in excess of the ($1.1 billion) provision."

A report in the Wall Street Journal said the fine would be close to $2 billion. BNP declined to comment.

Asked if the fine could reach $2 or $3 billion, BNP's Machenil told Reuters Insider: "There is nothing more to say."

Machenil told analysts on a conference call that the bank had already set aside around 2.7 billion euros ($3.73 billion) for litigation costs, including the specific $1.1 billion provision.

His comments came after BNP posted a higher-than-expected 5.2 percent rise in first-quarter net income.

Shares in the bank were down 3.8 percent at 53.80 euros by 1434 GMT, having fallen as low as 53.55 euros, not far from their lowest of the year so far. The European banking sector .SX7P was down 0.8 percent.

U.S. federal prosecutors are considering criminal charges against BNP for doing business with countries subject to U.S. sanctions, such as Iran, Sudan and Cuba, a person with knowledge of the matter has said.

Regulators may consider suspending the bank's ability to conduct dollar clearing in New York - the process by which transactions are quickly settled and cleared within the banking system - and are looking at possible penalties for individual employees, the person said.

BNP declined to comment. The bank has said it wants North America to account for 12 percent of revenue by 2016, up from 10 percent in 2013, and wants to improve cross-selling between its U.S. investment bank and retail bank unit BancWest.

OPERATIONAL SANCTION

"The risk is that some form of operational sanction may undermine the bank's ability to meet these targets," analyst Jean-Pierre Lambert at brokerage Keefe, Bruyette & Woods said.

"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," Lambert said.

Past U.S. settlements have ensnared rivals such as Standard Chartered (STAN.L), which agreed in 2012 to pay $327 million to resolve allegations that it violated U.S. sanctions against Iran, Sudan, Burma and Libya. The bank was separately fined $340 million by New York's banking regulator over Iranian sanctions.

JPMorgan Chase (JPM.N) agreed to pay $13 billion in 2013 over mortgage-related charges, while HSBC (HSBA.L) agreed to pay $1.9 billion to settle a multi-year U.S. criminal probe into money-laundering lapses.

Meanwhile BNP's results showed the effects of its full takeover of Belgian subsidiary Fortis last year, which helped offset writedowns on assets exposed to the Ukraine crisis and rising loan losses in Italy.

The bank has a robust capital base relative to peers, with a core Tier 1 ratio of 10.6 percent at end-March. Machenil said BNP has "excess capital" but would not use this to buy back shares at their current valuation.

"Today we are (trading) somewhere around book value," he said. "You're going to do share buybacks when your share price is substantially below book value."

These comments, coupled with the uncertainty over the U.S. fine, undermined BNP's appeal to investors, Jefferies analyst Omar Fall said.

"The guidance for a higher-than-expected fine on dealings with sanctioned countries and management backing away from a buyback are unhelpful for the capital return story," Fall wrote in a note to clients.

Armenian Parliament to reconsider issue of electing new prime minister
Armenian Parliament to reconsider issue of electing new prime minister
Enmity with Turks is catastrophe not only for Armenia, but for entire region - Pashinyan
Enmity with Turks is catastrophe not only for Armenia, but for entire region - Pashinyan
Int'l Judo Federation thanks Azerbaijan for return of previously detained Armenian judoka
Int'l Judo Federation thanks Azerbaijan for return of previously detained Armenian judoka
Loading Bars
Latest
Latvia eases entry rules for vaccinated travelers
Three rockets launched toward Israel from Lebanon, no damage -Israeli military
Africa's COVID-19 cases surpass 4.66 mln
Over 500 residential buildings razed by Israeli airstrikes in Gaza Strip
Azerbaijani Foreign Ministry issues statement on tension on Armenian-Azerbaijani border
China's Qinghai donates anti-pandemic supplies to Kyrgyzstan
Azerbaijani FM talks tension on Azerbaijani-Armenian border with OSCE Chairman-in-Office
Georgian's commercial banks see increase in number of total loans
Azerbaijani, Russian FMs exchange views on tensions on Azerbaijani-Armenian border
Overseas election headquarters established at Iran’s foreign ministry
Sputnik V approved for use in Republic of Maldives
Azerbaijan shares data on number of vaccinated citizens for May 13
Azerbaijan confirms 509 more COVID-19 cases, 1,427 recoveries
COVID-19 cases decrease in 80 Turkish provinces in a week
Tajikistan delegation to visit Uzbekistan on May 14
Gaza death toll jumps to 84 as Israeli air raids intensify
Musk decries bitcoin's 'insane' energy use after Tesla payment U-turn
Azerbaijani president got touched by National leader Heydar Aliyev's words about Shusha (VIDEO)
Azerbaijani president once again says at Jidir Plain in Shusha - Karabakh is Azerbaijan! (VIDEO)
EU countries urged to halt non-essential travel from India
U.S. weekly jobless claims fall
Gaza flare-up further weakens shekel
Georgia increases aviation fuel imports
Iran ready to have closer ties with Saudi Arabia, FM says
Azerbaijan’s import of goods from Italy down
Iran talks insurance data in its mining sector
Turkish ministry discloses volume of cargo handled through Mersin port
Georgia adopts new rule on forest use
Kazakh Senate adopts document on economic relations with Kyrgyzstan, within EAEU
Volume of chemical products exported by Turkey to Azerbaijan disclosed
KazTransOil completes connecting newly constructed sections to Uzen-Atyrau-Samara pipeline
Trade ministry discloses volume of cereals imported by Kazakhstan from Turkey
Russian Bright Way Group to set up pharmaceutical plant in North Kazakhstan
Georgia sees decrease in amount of local small companies
Turkmenistan's Turkmennebit opens tender to purchase of chemical products
Kazakhstan's exports to Latvia decrease
Kazakhstan boosts agriculture goods output
A year ago, different music was played in Shusha, other actions were taking place here - President Aliyev
President Ilham Aliyev meets with journalists in Shusha
Georgia establishes its first avocado farm
Tender for park construction opens in Turkmenistan's Dashoguz region
Trade ministry discloses volume of cereals imported by Georgia from Turkey
Turkey’s export of steel to US soars
UNIDO talks current global projects in Kazakhstan
First VP Mehriban Aliyeva shares footage from gala concert of “Kharibulbul” music festival on her Instagram page (VIDEO)
Power transmission line of Turkmenistan's Mary State Power Plant ready for commissioning
Кazakh Electricity Grid Operating Company opens tender to buy construction materials
Turkmenistan intends to increase pace of oil production
SOCAR to operate exports of Rosneft’s oil products to Ukraine - sources
Trade ministry discloses volume of electrical goods exported by Turkey to Germany
Volume of electrical goods exported by Turkey to Russia disclosed
India Fastest In World To Administer 17 Crore Vaccine Doses In 114 Days: Centre
Azerbaijan’s import of goods from Germany down
Forex reserves surge by $32.29 bn in six months: RBI
How IAF, Navy have pressed transport planes, ships to bring Covid relief to India
India received $83 billion in remittances in 2020: World Bank report
American India Foundation raises $25 million for Covid-19 assistance to India
Vietnam Buddhist Sangha presents medical equipment to India
Lemonade tanks as Texas freeze hits Q1 results
Russia reports over 8,300 COVID-19 cases in the past day
Kazakh, Azerbaijani presidents hold phone talks
AZAL to Trial IATA Travel Pass in Azerbaijan
Azerbaijani president, first lady watch performance of Kharibulbul festival participants (PHOTO/VIDEO)
Georgia sees decrease in revenues from foreign tourism
Azerbaijani president visits Yukhari Govharagha mosque in Shusha (PHOTO)
External merchandise trade of Georgia up
UNIDO, Gov't of Uzbekistan consulting to explore potential project ideas
Italy fines Google $123 mln for abuse of dominant position
Georgia reports 776 new cases of coronavirus for May 13
Armenians destroyed many mosques during occupation of Azerbaijani lands
Turkey’s export of steel to Uzbekistan up
Georgia takes steps to increase availability of agricultural land for farmers
Turkey’s export of ready-made clothes to Iran up
Iran ready to return to its JCPOA obligations, MFA official hints
Azerbaijani ferry delivers modern equipment to Turkmenistan
Turkey’s export of cement to Kazakhstan up
Azerbaijan discloses composition of national gymnastics team for competitions in Bulgaria
Caucasian Muslims Office chairman talks about new mosque in Azerbaijan’s Shusha
Kazakhstan needs to ensure environmental sustainability of extractive industries - UNIDO
Rolls-Royce sticks to guidance for 2021
Kazakhstan unveils value of payments of compulsory vehicle insurance
Azerbaijani people won Second Karabakh War thanks to unity - Caucasian Muslims Office
Turkmenistan takes part in adoption of documents within "Central Asia-China" meeting
Very happy to participate in Khary Bulbul festival in Shusha – Azerbaijani people's artist
Azerbaijan’s import of pharmaceutical products increases
Kazakhstan, France agree on roadmap for economic co-op until 2030
Latest prices for Azerbaijani oil disclosed
RCEP An Unbalanced Trade Agreement: Piyush Goyal
Indian Union Cabinet approves MoU between ICAI, Qatar finance body to develop accounting and entrepreneurship
IEA expects Azerbaijan to raise oil output in Q2
India's Merchandise Exports Can Hit $400 This Year Says Piyush Goyal
Azerbaijan’s average compliance with OPEC+ deal up - IEA
Festive prayer performed at Teze Pir mosque in Azerbaijan’s Baku (PHOTO)
Kazakhstan’s freight transportation operator opens tender for equipment maintenance
Global biofuel production to recover to 2019 level in 2021
More than 4,000 Indians die of COVID-19 for second straight day
Central Bank of Azerbaijan allocates funds to support its website
Snam sees increase in net financial debt
LNG market remains one of highest emitters of carbon globally
Azerbaijani ombudsman appeals to UN High Commissioner for Human Rights
All news