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Merkel Ally Criticizes U.S. Sanctions-Busting Bank Fines

July 11 (Bloomberg) -- U.S. court settlements that imposed fines on banks including BNP Paribas SA are “highly questionable,” said Volker Bouffier, the premier of Germany’s Hesse state and an ally of Chancellor Angela Merkel.

The settlements “seem arbitrary,” Bouffier, whose state includes Frankfurt, Germany’s financial center, said in an interview today. The Christian Democrat echoed criticism by Ulrich Grillo, head of Germany’s BDI industry federation, who suggested in a newspaper interview that the U.S. was seeking to “starve” European banks to ease their takeover.

“One can have the feeling that legal concerns are not central to the settlements,” Bouffier said in Berlin. “I personally view the American sanctions system as highly questionable, as almost arbitrary.”

His comments underscore trans-Atlantic strains from banking to military drone orders as German authorities exposed two alleged U.S. spies this month. Commerzbank AG, Germany’s second-biggest lender, will probably be the next bank to resolve alleged U.S. sanctions violations, according to a person with knowledge of the matter.

Bouffier said he advocates introducing international arbitration to adjudicate sanctions cases. The move would create common rules for settlements that are presently forged in lower U.S. courts.

Frankfurt-based Commerzbank, which is 17 percent state-owned, may incur penalties of at least $500 million as part of a deferred-prosecution agreement with authorities, a person familiar with the matter said on July 8.

The U.S. has brought at least 22 cases against financial firms since 2009, mostly overseas banks, for doing business or handling funds linked to sanctioned countries such as Iran and Cuba. A record $8.97 billion fine was imposed on BNP Paribas. Deutsche Bank AG and Italy’s UniCredit SpA are among other lenders being investigated by U.S. authorities.

Grillo, in an interview in Frankfurter Allgemeine Zeitung today, said “it can’t be that America can weaken the European financial system and at the end of it perhaps buys the one or the other bank.”

The situation posed by the U.S. court rulings is “critical,” he said.

To contact the reporters on this story: Brian Parkin in Berlin at; Birgit Jennen in Berlin at

To contact the editors responsible for this story: Alan Crawford at Tony Czuczka, James Kraus

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