US authorities look set to step up their attack on the global banking industry by seeking a record penalty of more than $10bn (£6bn) from the French lender BNP Paribas.
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 $4bn paid by BP following the Gulf of Mexico oil spill.
The fine would be smaller than the $13bn 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.
Other banks to face the wrath of US authorities in recent years over sanctions busting include HSBC and Standard Chartered, but they did not plead guilty to criminal charges, which can restrict a bank’s operations in the US.
Although a final settlement is believed to be some way away, and BNP’s admission of criminal charges is also uncertain, $10bn is significantly higher than the $1.1bn BNP has set aside to deal with the allegations. Analysts also warned the bank might have to raise extra capital to pass European Union stress tests.
BNP may also face other penalties in the US including a ban from dollar clearing, which in effect would bar it from trading assets like oil, experts said. BNP declined to comment. The news hit BNP’s shares, which fell as much as 6 per cent in Paris on Friday.
“Beyond the uncertainty related to the potential financial settlement, the key issues remain the type of potential charges and the impact on BNP’s operational capability,” Kinner Lakhani, an analyst at Citigroup said.
North America is a vital part of its 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.
The row caused a stir in France, where the Front National – fresh from its electoral breakthrough at European elections this month – claimed that the French government is failing to protect the country’s biggest bank against US regulators.
“It is [the French state’s] duty and responsibility to defend and protect the interests of million of French depositors,” the far-right party said. “It must also ensure that French interests are not pushed out of certain countries under false pretences with the sole aim of making way for American interests, as we have already seen in Iran when Peugeot was ordered to quit the country only to be replaced a few months later by American competitors.”
US regulators and prosecutors have been pushing for tougher penalties on banks and last week the Swiss bank Credit Suisse agreed to plead guilty to US criminal charges that it had helped rich Americans evade taxes. It also paid a fine of $2.6bn, more than twice the expected amount.
In contrast, its Swiss peer UBS paid a $780m fine over similar charges in 2009 but reached a deferred prosecution agreement with the US. A criminal conviction gives US regulators powers to revoke bank licences in the US, although they have said they will not seek to revoke Credit Suisse’s licence, but will appoint a monitor over it.