BNP Paribas warns U.S. sanctions fine could exceed provision

Wed May 14, 2014 2:31pm EDT
 
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By Maya Nikolaeva and Matthias Blamont

PARIS (Reuters) - BNP Paribas, France's biggest bank, said on Wednesday there was a risk that a fine for violating U.S. sanctions could be significantly higher than the $1.1 billion euros it has provisioned for.

Chief Executive Laurent Bonnafe, speaking at a shareholders meeting, did not say how much BNP expects to have to pay, but people familiar with the matter told Reuters earlier this week that BNP is in talks with U.S. authorities to pay more than $3 billion to resolve probes into whether the bank violated U.S. sanctions on Iran, Sudan and other countries.

Bonnafe said the bank is doing what it can to ensure that such mistakes do not occur in the future.

"We have improved our control processes," he said.

He added that the bank will continue talks with U.S. authorities about the investigation and said he had met U.S. authorities in Washington and New York last week.

The bank has already set aside around 2.7 billion euros ($3.7 billion) for litigation costs, including a specific $1.1 billion provision for a breach of sanctions.

Bonnafe said he could not say when a settlement may come.

The Wall Street Journal, citing sources, said on Wednesday that BNP has alerted the French government that the fine may exceed $3 billion. A government spokesman could not immediately be reached for comment.   Continued...

 
The logo of financial group BNP Paribas Fortis is seen outside the Belgian headquarters in Brussels November 17, 2011. REUTERS/Thierry Roge