NEW YORK/PARIS —
French bank BNP Paribas SA is likely to pay $8 billion to $9 billion as part of a potential settlement with U.S. authorities over violations of sanctions, according to a person familiar with the matter.
U.S. authorities are investigating whether BNP evaded U.S. sanctions relating primarily to Sudan between 2002 and 2009, and whether it stripped out identifying information from wire transfers so they could pass through the U.S. financial system without raising red flags, sources have said.
The size of the potential fine has been a source of tension between France and the United States, with French President Francois Hollande warning against a “disproportionate” penalty that might damage France's biggest listed bank.
A big penalty could not only hit BNP's capital position and dividend, but could weaken its attempts to expand in North America as it strives to raise revenue and profits outside its traditional European markets.
The U.S. investigation has turned up books and records violations in transactions involving Sudan, Iran and Cuba, a source familiar with the matter said on Sunday.
A BNP spokeswoman declined to comment.
French Finance Minister Michel Sapin on Monday did not comment on a possible deal, but repeated the French position that any penalty should be fair and proportionate.
“The French state, the government... has played its role in telling the Americans: 'Be careful - by all means punish the past but don't punish the future,'” he told France Info radio.
Earlier in the month, Reuters reported that U.S. authorities negotiating with BNP at one point suggested a penalty as high as $16 billion, although that was viewed as a negotiating tactic in response to an offer from BNP of about $1 billion.
BNP, the biggest collector of investment-banking fees in France according to data from Thomson Reuters and Freeman Consulting, has been negotiating on an almost daily basis with U.S. authorities for weeks.
The potential settlement could include BNP pleading guilty to a criminal charge of violating the International Emergency Economic Powers Act, another source familiar with the matter has said. The potential settlement was first reported by the Wall Street Journal.
A further source close to the situation said BNP could accept a guilty plea, but it was unclear if any charge would be against the parent group or at a subsidiary level, such as the Swiss unit including its Geneva commodity trading center.
BNP was the world's top financier of commodity trading throughout the 1990s and 2000s. However, it has drastically reduced staffing in its Geneva and Paris offices over the past two years as it cut some of its riskier business and studied implications of the U.S. investigation, BNP insiders and senior trading executives have told Reuters.
BNP's revenue targets for its trade financing business could be missed due to the investigation, analysts at Jefferies said in a note last week, citing the risk of it losing business.
The bank faces other penalties such as being suspended from clearing clients' dollar transactions, sources close to the situation have said. A source familiar with the matter said on Monday parties were still negotiating the duration of any ban.
The U.S. investigations are being conducted by authorities including the U.S. Justice Department, the U.S. Attorney's office in Manhattan, the U.S. Treasury Department, the Manhattan District Attorney's office, and the New York Department of Financial Services.
The New York Department of Financial Services, which oversees certain banks in New York, would not revoke the bank's license to operate in New York if BNP agreed to other stiff penalties, a source has said.
The state regulator has sought the termination of more than a dozen employees as part of the settlement, at least some of whom have already left.
Shares in BNP were little changed at 1500 GMT.