Hollande to discuss possible $10B bank fine with Obama
French President François Hollande says he plans to talk to President Obama tomorrow about the possibility of France's BNP Paribas bank (BNP.FR) being hit with more than $10 billion in fines for violating sanctions against Iran and Syria.
"I don't know if he wants to talk about it, but I will talk to him about it (on Thursday evening)," Hollande told reporters Wednesday during a trip to Warsaw. The two presidents are scheduled to have dinner in Paris tomorrow. Obama is visiting France to commemorate the 70th anniversary of the D-Day landings.
This is just the latest step by the French government to defend the bank against what it considers to be excessive penalties. In a letter dated April 7 and made public today Hollande said while BNP Paribas should pay in case of wrongdoing, the penalty shouldn't be "unfair and disproportionate." Yesterday, French Foreign Minister Laurent Fabius said any sanctioning of France's largest publicly-listed bank "must be proportional and reasonable."
The Justice Department and other U.S. government agencies are pushing for BNP to pay more than $10 billion and plead guilty to violating U.S. sanctions against countries including Iran, Syria, Cuba and Sudan, according to published reports. Prosecutors are also said to be seeking a temporary suspension of the bank's dollar-clearing operations.
The bank has acknowledged it is having discussions with U.S. authorities and said the fines could be "far in excess" of the $1.1 billion it has set aside to cover possible penalties. A $10 billion fine could cost the bank far more than the $7.7 billion it is estimated to earn this year and would be more than three times the combined fines paid in 2012 by HSBC Holdings (HSBA), Standard Chartered and ING Groep NV (INGA) for sanctions violations.
With France's economy still struggling the government is concerned large penalties on the bank, one of Europe's biggest, could destabilize the financial system and cut lending to businesses. "If BNP Paribas saw its capital amputated, that would mean less lending to business, notably French business," Fabius said on French television Tuesday.
On Friday, when news of the size of the fine first surfaced, the bank's stock fell three points to close at 49.57; at mid-day today it was trading at 51.16.
