BNP Paribas SA won a reprieve during final talks to settle a criminal probe into U.S. sanctions violations, giving the bank six months to prepare for a ban on handling certain dollar transactions, according to a person with direct knowledge of the matter.
U.S. authorities rebuffed a last-ditch push by the bank to slash an $8.9 billion penalty, two other people said, asking not to be identified because talks are private. The yearlong ban on dollar clearing could affect specific business lines, such as oil (NYMEX:CLN14) and gas (NYMEX:NGN14) transactions, and certain offices, such as Geneva, where the alleged illegal transactions took place, a person familiar with the terms said last week.
BNP Paribas, France’s largest bank, is poised to plead guilty today in Manhattan federal court, ending years of investigation by accepting a record penalty for violating U.S. sanctions against blacklisted nations, people familiar with the case have said. The talks with state and federal authorities in the U.S. had drawn warnings from French officials against levying disproportionate fines that could harm their nation’s economy and Europe’s banking system.
BNP Paribas, suspected of hiding about $30 billion in transactions, will probably plead guilty to conspiring to violate the International Emergency Economic Powers Act, a person familiar with the discussions said last week.
Bertrand Cizeau, a spokesman at BNP Paribas, declined to comment on the final terms.
BNP fell 0.2% to €49.32 by 3:17 p.m. in Paris trading, valuing the bank at €61.4 billion ($83.9 billion). The shares slumped 13% this year and closed at a more than nine-month low on June 26.
Banks transfer money around the world for clients trading goods, making investments and paying suppliers. While the business of moving money isn’t a significant source of revenue for banks, it’s an essential service clients rely on to conduct business globally.
Temporarily restricting its ability to handle transactions in dollars would present BNP with administrative costs and could test the willingness of clients to remain with the bank.
A targeted yearlong ban could cost BNP Paribas $40 million or less, Jean-Pierre Lambert, a Keefe, Bruyette & Woods Ltd. analyst in London, said in a report on June 26. That estimate was based on all wire transfers going through the U.S. and would come down significantly under a narrower restriction.
U.S. authorities aren’t ruling out the possibility of charging individuals in the future, one of the people said. Doing so would probably require additional investigation, such as pushing for more evidence from overseas, that person said.
The probes are being conducted by the Justice Department, U.S. Attorney Preet Bharara, Manhattan District Attorney Cyrus Vance Jr. and Benjamin Lawsky, superintendent of New York’s Department of Financial Services. They involve alleged violations of sanctions against Sudan, Iran and Cuba, mostly dating from 2002 to 2009, with some continuing until 2011, another person familiar with the matter has said. Spokesmen for the Justice Department, Bharara, Vance and Lawsky declined to comment.
BNP Paribas Chief Executive Officer Jean-Laurent Bonnafe told employees in a letter that the bank’s negotiations were “accelerating” and would conclude “very soon,” according to a June 28 report on the website of French broadcaster i-Tele.