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Thursday, October 20, 2016

New York (AFP) — French bank BNP Paribas has agreed to pay U.S. authorities a $8.9 billion fine to avoid being tried in court for dealing with U.S.-blacklisted countries, sources close to the matter told AFP.

The deal ends months of haggling which saw French President Francois Hollande pressing his U.S. counterpart Barack Obama to intervene and lighten the punishment.

Agreement on the record fine, approved by the bank’s board of directors at a special weekend meeting in Paris, is due to be announced Monday after markets close at the New York Stock Exchange around 4:00 p.m.

The U.S. Justice Department and New York banking regulator Benjamin Lawsky will make separate announcements, another source said, also speaking on condition of anonymity.

BNP declined requests for a public comment.

At least $2 billion of the fine will go to Lawsky, who is temporarily suspending parts of BNP’s dollar-handling business in the United States — key to any major bank’s U.S. operations — for all of 2015.

Sources said the suspension would take place progressively since BNP has operations underway.

BNP, France’s largest bank, has until December 31 to find a bank that agrees to make dollar payments on its behalf.

The deal forces BNP to plead guilty to the bank’s deals from 2002 to 2009 with countries that Washington has blacklisted like Cuba, Iran, and Sudan.

The investigation probed more than $100 billion of transactions, finding that $30 billion of that amount were concealed in order to skirt the sanctions.

– Too tough on BNP? –

BNP has a strong enough capital base to handle the penalty, but the size of the fine and the temporary suspension of parts of its dollar-handling business — key to any major bank’s U.S. operations — will mean a significant hit on its earnings.

BNP chief executive Jean-Laurent Bonnafe reportedly wrote to employees on Friday conceding the bank will be “punished severely,” but stressing that “this difficulty … will not impact our roadmap.”

U.S. authorities have already forced BNP to dismiss three senior officials allegedly linked to the sanctions violations, including its chief operating officer.

Lower bank officials could also be fired as part of the settlement.

Sources say the settlement could include a year-long suspension of the bank’s dollar clearing for oil and gas trading activities in Switzerland, Singapore, and France, and suspension of dollar clearing on behalf of other banks and some clients.

That would likely be a blow to the bank’s bottom line. In 2013 BNP reported total profits of 4.83 billion euros ($6.59 billion) on revenues of 38.8 billion euros. It has already set aside $1.1 billion to cover losses from the case.

BNP has been largely quiet about the allegations and potential penalties during months of negotiations.

Critics have accused Washington of being especially tough with foreign banks, and BNP in particular, while treating U.S. banking transgressions more lightly.

In punishing U.S. banks for financial crisis-related violations, negotiated fines have run into the billions but none has had to plead guilty, an act which could lead to the loss of a banking license.

In 2012 Dutch bank ING paid a relatively paltry $619 million financial crisis, and Britain’s Standard Chartered $670 million. HSBC, which was also accused of complicity in money laundering, paid $1.9 billion.

None were forced to plead guilty or halt certain banking operations.

But US authorities have become much tougher on banks that are less cooperative in investigations.

– ‘Negative consequences’ –

In May, Credit Suisse pleaded guilty to helping Americans evade taxes and was fined $2.6 billion, over three times the $780 million fine US authorities imposed on fellow Swiss bank UBS for the same charges in 2009.

Analysts say the size of the BNP fine relates to the size of the business it did with Sudan and Iran, several times larger than that handled by ING and Standard Chartered.

The BNP controversy has been a thorn in U.S.-France relations. French officials warned in early June that it could cause problems for the huge transatlantic trade treaty under negotiation between the European Union and the United States.

“Evidently… this risks having negative consequences,” Foreign Minister Laurent Fabius ominously warned.

Hollande also raised the issue with Obama during a dinner in Paris.

Fabius said that Hollande had told Obama the case is “very important for Europe and for France,” saying if BNP is weakened it would “create a very negative interference in Europe and its economy.”

But even before the dinner, Obama had signaled he would stay out of a legal issue.

“The rule of law is not determined by political expediency,” he said.

AFP Photo / Loic Venance

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  • Alvin Harrison


    Crime does pay. If you are a big corporate bank it pays very well. In a related story…. Four of our biggest banks pleaded guilty to manipulating the currency markets worth 5.3 trillion. They admitted they cheated but no one goes to jail. They did however have to pay a huge fine… 5 billion between them.

    That’s big right? Well if you consider that just one of the banks profited 4.3 billion in just one quarter alone during the 7 years or so this was going on…not so much. It is the equivalent of you stealing a Mercedes, getting caught and your having to return the spare tire as your “punishment”.

    The Economic media thinks the big win here is that the banks admitted they did wrong. So to keeping with the analogy above…the people won because we got you to admit you stole the car… give us the spare your criminal….and be on your way.

    Somehow this “justice” system we reserve for the rich and powerful does not seem in line with what we mete out to other criminals. Petty criminals get YEARS for stealing very little…and don’t even speak about the 3 strikes rule of law, with life as it’s punishment. There is no 3 strike rule for these thieves…which is too bad because they are all multiple offenders. Nor does it seem it will be much of a deterrent. They have worked the fines in as a cost of doing their dirty work….and it is not a big cost either, considering.

    We hear very little outrage over this type of theft. Maybe the numbers are so big they defy analysis by a regular American. But…let a Black man steal $100 item…what is our response..The “thug” must go to jail….immediately…for a long time. I would suggest that these thieves in suits are much more deserving of of our wrath and REAL justice. They all but buried us the last time…and we put up their bail. How do they thanks us….by stealing more. But they won’t see justice because they control the system.

    If I have said it once, I have said it a thousand times…and will keep saying it. Until we get Big Money and the Corp/1% out of our political system we will continue down a path that widens the wealth inequality of our citizenry and ends in a Master/Slave societal model.

    We laugh smugly and say things like…”the system of justice in Mexico is so corrupt”. Well my friends, the system of justice in America is WAY more corrupt….it just costs more to play the game. Oh and by the way…forget it…you can’t play.