French bank BNP Paribas is expecting to be fined billions later today (June 30th) for allegedly breaking sanctions rules.
In an internal memo, chief executive Jean-Laurent Bonnafe told employees that the bank will be “punished severely”, but that this will enable the bank to get rid of uncertainty and put its issues behind it.
BNP Paribas is accused of concealing as much as $30 billion (£17.61 billion) of transactions for clients in countries that are subject to sanctions such as Iran, Sudan and Cuba. The Financial Times reports that the bank is planning to admit guilt, too, which is a particularly unusual step in these cases.
But according to the Wall Street Journal, the expected $8.9 billion settlement will mean paying just 27-30 cents in fines for each allegedly illegal transaction – much less than Credit Suisse, Standard Chartered or RBS had to pay in penalties for any of their recent cases.
According to the news provider, BNP has negotiated a slight reprieve with the US authorities that will see a year-long ban on clearing US dollar transactions delayed for six months.
That breathing space will allow the bank to make other arrangements for clients so they can continue to access US dollar financing – but since this is an important element of BNP’s own global wholesaling activity, the effects on the bank may not yet be clear.
The suspension will not apply to all branches of the bank, but focus on those regulators believe were directly responsible for the alleged violations. That includes oil and gas financing units in Paris, Geneva and Singapore, as well as clearing for other bank.
But BNP has been talking to other banks about ways BNP clients could potentially use their dollar clearing services as a means of keeping clients over the source of the ban.
However, it appears that the admission of guilt and BNP’s willingness to settle have encouraged investors somewhat as shares in the bank have recovered slightly this morning.
The bank has lost as much as 15 per cent of its share price since the start of April, but in this morning’s trade stock is slightly up – as of 09.05 BST, shares were up by a slight 0.13 per cent.
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