Shares in BNP Paribas plunged in early trading after it emerged that the French lender is facing a record fine of more than $10 billion (£6 billion) from US authorities.
The company is alleged to have broken sanctions imposed on countries including Cuba, Iran and Sudan, meaning it now faces a larger penalty than the $4 billion paid by BP following the Gulf of Mexico oil spill.
The fine would be smaller than the $13 billion settlement agreed with JPMorgan last year for misleading investors in the lead-up to the financial crisis.
However, this was a civil penalty, rather than a criminal charge.
Although a final settlement is believed to be some way away, a figure as high as $10 billion is significantly higher than the $1.1 billion BNP has set aside to deal with the allegations.
According to reports, prosecutors are pressuring the company to plead guilty to moving funds for clients.
BNP could also face other penalties in the US including a ban from dollar clearing, which would effectively bar it from trading assets like oil, experts said. BNP declined to comment.
The news hit shares in the company, which fell almost 6 per cent to €49.79.
Analysts said a fine of $10 billion would hit BNP book value by about 5%.
“Beyond the uncertainty related to the potential financial settlement, the key issues remain the type of potential charges and impact on BNP’s operational capability,” Kinner Lakhanu, analyst at Citigroup said.
Paris-headquartered BNP Paribas is best known for signalling the start of the financial crisis in August 2007 by halting withdrawals from three funds invested in subprime mortgage-backed securities.
North America is a key part of its new strategy to increase profits outside Europe and it aims for the region to account for 12 per cent of its 2016 revenues, up from 10 per cent in 2013.
Last month, the company reported a 5.2 per cent increase in first-quarter after-tax profits to €1.67 billion (£1.36 billion).
Speaking at the time, Lars Machenil, the bank’s finance director admitted: “There is uncertainty with respect to the amount and the nature of penalties the US will impose.
“It’s not impossible that the fine is far in excess of the [$1.1 billion] provision.”