April 30 - France's BNP Paribas has warned it might be hit with a U.S. fine far in excess of the $1.1 billion that it set aside last year to cover litigation costs linked to potential breaches of U.S. sanctions. Joanna Partridge looks at the implications for the lender.
France's biggest bank waits to hear the cost. BNP Paribas has warned it might be hit with a bigger fine from the U.S. than it had prepared for. The bank set aside $1.1 billion last year to cover litigation costs over potential breaches of U.S. sanctions on countries such as Iran. Lars Machenil is BNP's Chief Financial Officer. SOUNDBITE: Lars Machenil, CFO, BNP Paribas, saying (English): "There is no specific timeline, the process is ongoing. There is an uncertainty with respect to the amount and the nature of penalties the U.S. will impose. It means that the amount of the fine can be, it's no impossible that it is far in excess of what has been provisioned." U.S. federal prosecutors are also considering criminal charges against BNP for doing business with sanctioned countries like Iran, Sudan and Cuba. Regulators may also restrict the bank's business in New York at a time when it wants to expand across the Atlantic. Growing revenue and profits outside its traditional European markets are a key part of its new strategy. It hopes North America will account for 12% of its revenue by 2016, up from 10% last year. Alastair McCaig is from IG. SOUNDBITE: Alastair McCaig, Market analyst, IG, saying (English): "It seems very much like there's a groundswell of opinion in the U.S. to do away with the sort of more comfy agreements, whereby penalties can be agreed directly with the companies rather than taking the fines all the way to their full conclusion. I think BNP Paribas could find that the damage could be considerably larger than this $1.2 billion that they've set aside." The news came as BNP posted a rise in first quarter net income of 5.2%. That was higher than expected but its shares still fell by almost 4%, close to their lowest level this year. But BNP isn't the only bank facing a fine. The global industry is dealing with a string of investigations into alleged misdeeds - including fixing interest rates and manipulating foreign exchange markets.