France’s BNP Paribas has agreed to pay a record $8.9 billion fine for working with countries subject to US sanctions, but most of its bankers will get their bonuses.
The bank’s finance director, Lars Machenil, speaking for the first time since last night’s deal with the four US regulators, said that staff bonuses would be based “on this year’s performance” and would “exclude the impact of the US fines”.
But the bank declined to respond to questions about whether or not its directors and senior executives would have their bonuses cut this year.
BNP will pay the fines and settlement to the US Department of Justice, Office of Foreign Assets Control, Manhattan’s district attorney and the New York Department of Financial Services.
It pleaded guilty in a New York court to falsifying records last night and will enter guilty pleas in a federal court next week on charges including trading with the enemy.
Mr Machenil said BNP would pay the fine from “existing cash” resources but told investors that plans to raise the dividend this year from €1.5 a share to around €2 would not happen. However, he promised a €1.5 cash pay-out for the year.
This went down well with investors and BNP shares rose 3.5 per cent to 51.3 but they are still down more than 9 per cent this year.
Mr Machinel said: “At the end of the first quarter we had an overall excess of stable funding of 100 billion (£79.86 billion) out of which 50 billion was in US dollars. Yesterday when I looked into the systems... that figure was basically unchanged at the end of the (second) quarter. This should allow having relevant cash for the settlement.”
“We deeply regret the past misconduct that led to this settlement,” Jean-Laurent Bonnafe, chief executive of BNP, said.
“The failures that have come to light in the course of this investigation run contrary to the principles on which BNP Paribas has always sought to operate.”
On top of the fines BNP will be barred from clearing certain US dollar transactions for the whole of 2015. It was also told to fire 13 individuals and not rehire them.
Sources said several dozen bankers who worked in the key areas like oil and gas financing, which broke sanctions against Sudan, Iran and Cuba, were likely to be demoted and have their bonuses cut and previous payments potentially clawed back.
Swiss regulator Finma today said it was investigating staff at BNP Paribas’ Geneva arm and had banned it from dealing with any sanctioned countries for two years.