BNP shakes off impact of U.S. fine, returns to profit

Fri Oct 31, 2014 12:06pm EDT
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By Maya Nikolaeva and Matthias Blamont

PARIS (Reuters) - BNP Paribas (BNPP.PA: Quote), France's largest bank, returned to net profit in the third quarter and rebounded from a costly U.S. legal settlement to publish what it called a "rock solid" balance sheet, sending its shares up over 4 percent.

BNP -- battling to restore investor and client confidence after a $8.9 billion fine from U.S. authorities -- reshuffled its top ranks in the quarter to tighten controls. It said veteran adviser and trouble-shooter Jean Lemierre would take the role of chairman in December.

The bank settled with U.S. authorities in June, paying up over accusations that it violated U.S. sanctions against Sudan, Cuba and Iran over a 10-year period up to 2012.

"The excess capital story at BNP has been derailed by litigation for the time being, but trends this quarter are encouraging," Geoff Dowes, an analyst at Societe Generale said in a note.

Shares in BNP were up 3.9 percent at 50.35 euros at 11.14 a.m. EDT, outperforming a 2.5 percent firmer French market .FCHI.

BNP said on Friday its balance sheet had improved despite headwinds, reporting a core Tier 1 capital ratio under tougher Basel III rules of 10.1 percent. That was a small improvement from 10 percent at end-June, but taking into account the purchase of Polish bank BGZ and new regulatory adjustments.

Under the terms of the settlement with the U.S. authorities, BNP must clear all its dollar transactions in New York. Any oil- and gas-related business landing there throughout 2015 will be forwarded to a correspondent bank for clearing.

BNP Chief Financial Officer Lars Machenil said the operational details were being worked out. As a result, however -- and not helped by the drop in the oil price -- BNP's energy and commodities activities slowed in Europe.   Continued...

The logo of BNP Paribas is seen on top of the bank's building in Fontenay-sous-Bois, eastern Paris, May 30, 2014. REUTERS/Charles Platiau