May 30 - A $10 billion dollar fine could be slapped on BNP Paribas over allegations it evaded US sanctions, according to reports. At that amount, the penalty would be one of the biggest ever imposed on a bank. David Pollard reports
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A long list of litigation charges in the banking sector just got, if not longer, then certainly weightier.
At least, potentially.
BNP Paribas could be fined up to ten billion dollars - much more than expected.
That's according to the Wall Street Journal.
If confirmed, a huge jump from previous estimates - and nearly ten times what the bank's thought to have put aside.
US authorities may, the report says, also freeze BNP's ability to clear US dollar transactions.
Hitting investment bank, corporate and trade finance operations.
Dominic Elliott of Reuters Breakingviews.
SOUNDBITE (English) DOMINIC ELLIOTT, COLUMNIST, REUTERS BREAKINGVIEWS, SAYING:
''It may affect their growth strategy, because it will probably reduce their capital ratio a bit more than would have been expected to below 10 per cent. Ten per cent is kind of like a psychological threshhold for most banks in Europe. But unless there's a ban on certain businesses in the US, it may not have that much effect on BNP's business. Of course, those bans could happen and that would be a big problem.''
BNP is alleged to have evaded sanctions against Iran and other countries for years.
At ten billion dollars, the fine would put it in the litigation super-league.
JP Morgan paid 13 billion for misselling mortgage securities - a record US civil lawsuit.
Credit Suisse is paying 2.5 billion dollars for helping Americans evade taxes.
But for sanctions violations or money laundering, the biggest US settlement so far is HSBC at 1.9 billion.
Reuters banking correspondent, Steve Slater.
SOUNDBITE (English) STEVE SLATER, EUROPEAN BANKING CORRESPONDENT, REUTERS, SAYING:
''They're not the first, and I'm pretty sure they won't be the last ... There is clearly penalty inflation going on at the moment. We've seen throughout the crisis, that fines for Libor and other indiscretions, banks are being punished heavier and heavier the longer you've gone on, so BNP looks to be another case in point''.
BNP shares were hit sharply on the news - and on worries of what news the future might hold.
Says IG analyst, Chris Beauchamp.
SOUNDBITE (English) CHRIS BEAUCHAMP, ANALYST, IG, SAYING:
''Every time you think the banking sector has cleared all the skeletons out of the closet, another one comes through. And it just means that investors are constantly worrying. We're seeing that in the reaction to BNP this morning and we're seeing in the banking sector in London as well.''
A final resolution to the case is, it's thought, still some weeks away.
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