PARIS The French central bank said on Friday it was closely monitoring risks related to a U.S. probe of BNP Paribas which may cost France's biggest listed bank a multi-billion dollar fine and its reputation in one its growth markets.
BNP Paribas said last month it faced U.S. fines in excess of $1.1 billion in the case over alleged dealings with countries subject to sanctions.
Though BNP has declined to provide a specific number, U.S. authorities are seeking a settlement of more than $5 billion, according to media reports. If borne out, that would top the $2.5 billion recently agreed by Swiss bank Credit Suisse in an unrelated case over tax evasion.
"Obviously we are very attentive towards risks related to what could be a development in American jurisprudence," Bank of France Governor Christian Noyer said in answer to a question about the case.
Speaking as he presented the annual report of France's ACPR financial watchdog, Noyer declined to speak more specifically about BNP Paribas' case.
Asked about the risks to banks posed by U.S. regulations, he said that French regulators had found no evidence that French or United Nations rules had been broken.
He added that European banks were generally vigilant about U.S. regulations covering dollar transactions, even those carried out by non-U.S. companies.
North America is a key part of BNP's new strategy to increase profits outside Europe. It aims for the region to account for 12 percent of its 2016 revenues, up from 10 percent in 2013.
Fitch ratings said on Wednesday it expected the amount of BNP's fine to top that of Credit Suisse, as the level of fines imposed on banks by the U.S. authorities has been rising.
"We believe BNP would either be able to absorb any fine amount above the provision (for the case) through earnings, or take actions to support capitalisation should capital generation in relation to earnings be notably dented," Fitch said in a note.
It added that it may downgrade the bank's "A+" rating should the final decision be a surprise.
BNP's total litigation provision last stood at 2.7 billion euros ($3.69 billion), while it reported a net income of 1.7 billion euros in the first quarter.
(Reporting by Leigh Thomas; Additional reporting by Maya Nikolaeva; Editing by Pravin Char)