French President Francois Hollande plans to use a dinner this evening to press his U.S. counterpart Barack Obama over potential American penalties faced by BNP Paribas SA (BNP), France’s biggest bank.
The two leaders will dine together in a Paris restaurant and Hollande said yesterday he will ask the U.S. president to ensure fair treatment for BNP, which U.S. prosecutors say violated American trade sanctions.
Hollande’s promise to raise the matter with Obama signals his government’s growing concern that BNP, which had net income of 4.83 billion euros ($6.6 billion) last year, may be treated unfairly. A possible fine of as much as $10 billion would eclipse BP Plc (BP/)’s $4 billion agreement with the Justice Department last year.
“I don’t know if he wants to talk about it, but I will talk about it,” Hollande told reporters yesterday. “The justice system is independent in France and in the U.S., but we can make arguments regarding the disproportionate character” of potential penalties, he said.
Finance Minister Michel Sapin said that if BNP did break the law it should be punished, though the U.S. should take care not to impede the bank’s ability to lend at a time when French economic growth has stalled.
“We’re not trying to defend a bank” that may have broken the law, Sapin said. “We’re there to protect the stability of our financial system.” He added that France will “react firmly” if BNP isn’t treated fairly.
BNP rose for the first time in five days yesterday after the comments by Sapin and Hollande, climbing 1.2 percent to 51.50 euros. The stock has declined 9 percent in 2014.
U.S. authorities are seeking penalties to settle allegations that BNP transferred funds for clients in violation of American sanctions against Sudan, Iran and Cuba. Prosecutors are also pressuring the bank to plead guilty and its dollar-clearing business may be temporarily suspended.
“We obviously want whatever it is to be fair and to reflect an appropriateness to whatever it is that is alleged to have taken place,” U.S. Secretary of State John Kerry told reporters in Beirut yesterday, in response to a question. “I’m not sure that it belongs in our comments publicly between the two countries. But I’m confident that it’s something that we can work through and deal with.”
Standard & Poor’s said yesterday it may lower BNP’s long-term credit rating, currently A+, depending on the outcome of the investigation. The rating company cited the possible impact on the bank’s capital and disruption to some of its banking activities.
A $10 billion fine could more than wipe out this year’s earnings for BNP, estimated at 5.64 billion euros by analysts. It would also represent more than three times the combined fines paid by HSBC Holdings Plc (HSBA), Standard Chartered Plc (STAN) and ING Groep NV (INGA) in 2012 for sanctions violations.
Bank of France Governor Christian Noyer, speaking on May 23, said that U.S. jurisprudence on such matters has evolved in recent years and that BNP has complied with all European and French laws.
Noyer and other members of the European Central Bank’s governing council are meeting in Frankfurt to set monetary policy for the countries who share the euro. ECB President Mario Draghi holds a press conference at 2:30 p.m.
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