* BNP provisioned for $1.1 billion
* Sources say U.S. may seek fine of over $3 bln
* CEO says bank has improved its control processes
By Maya Nikolaeva and Matthias Blamont
PARIS, May 14 BNP Paribas, France's biggest
bank, said on Wednesday there was a risk that a fine for
violating U.S. sanctions could be significantly higher than the
$1.1 billion euros it has provisioned for.
Chief Executive Laurent Bonnafe, speaking at a shareholders
meeting, did not say how much BNP expects to have to
pay, but people familiar with the matter told Reuters earlier
this week that BNP is in talks with U.S. authorities to pay more
than $3 billion to resolve probes into whether the bank violated
U.S. sanctions on Iran, Sudan and other countries.
Bonnafe said the bank is doing what it can to ensure that
such mistakes do not occur in the future.
"We have improved our control processes," he said.
He added that the bank will continue talks with U.S.
authorities about the investigation and said he had met U.S.
authorities in Washington and New York last week.
The bank has already set aside around 2.7 billion euros
($3.7 billion) for litigation costs, including a specific $1.1
billion provision for a breach of sanctions.
Bonnafe said he could not say when a settlement may come.
The Wall Street Journal, citing sources, said on Wednesday
that BNP has alerted the French government that the fine may
exceed $3 billion. A government spokesman could not immediately
be reached for comment.
The probes are being conducted by 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.
Prosecutors have pushed the bank to plead guilty to criminal
charges as part of a resolution, sources have said.
Past U.S. settlements have hit rivals such as Standard
Chartered, which agreed in 2012 to pay $327 million to resolve
allegations that it violated U.S. sanctions against Iran, Sudan,
Burma and Libya. The bank was separately fined $340 million by
New York's banking regulator over Iranian sanctions.
A big U.S. fine could have ramifications for BNP beyond the
immediate financial impact, as the bank is targeting expansion
in North America as a key plank of a new strategy to raise
revenue and profits outside its traditional European markets.
Earlier this year, BNP struck a confident tone on its
outlook, promising a double-digit percentage rise in net
earnings per share over the next three years and an increase in
the dividend payout to 45 percent of earnings by 2016 from 41
percent in 2013.
BNP Paribas sees a return on equity of at least 10 percent
in 2016, but that target does not take into account any
potential U.S. fine.
($1 = 0.7296 Euros)
(Editing by Geert De Clercq, David Holmes and David Evans)