BNP Said Close to $9B U.S. Settlement on Sanctions

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June 23 (Bloomberg) -- Otto Ditchl, managing director at Stifel Nicolaus Europe, discusses BNP Paribas approaching a deal with the U.S. government that could cost it $9 billion in fines to settle allegations it violated U.S. sanctions and what it means for the bank going forward. He speaks with Olivia Sterns on “The Pulse.”

U.s. sanctions.

For more, let's bring in the managing director from europe.

Several moving pieces to the settlement.

A fine, access to u.s. dollar payment system, and the guilty plea.

It is the payment system and think people are most concerned about.

What do you think the applications will be for bnp of their frozen out?

I think you're right, there's still some uncertainty around that issue.

We don't know exactly what it means, access to all u.s. dollar payments or there seems also the the possibility it only affects international payments come in and out of u.s. for international clients, in which case as opposed to impact, it would be a bit smaller for bnp.

Indeed, what exactly these restrictions mean for the bank and how they can mitigate the effect for the next three months is not 100% clear at this stage.

Does this bring the -- does this break the bank, the reputational damage?

What does it do overall?

It doesn't break the bank, as such, but it certainly hurts it quite significantly.

Just look at the share price over recent months.

I think the reputational and five.

-- franchise over the medium-term is also uncertain we thought it was going to be $10 billion.

That bnp is being treated unfairly.

Do you agree with that?

To be honest, i'm not involved deeply enough in the legal -- but this is the second guilty plea compared to what credit suisse paid.

It certainly seems like a large amount.

At the same time, it does seem like there are substantial amounts of money involved that bnp moved in violation of the u.s. sanctions system.

You would expect any bank, especially one as global an important international financial system for bnp to play by the rules and obey the laws and the countries they operate in.

Some say under u.s. law, you could potentially be forced to pay for violating the sanctions laws and the doubled up payments, so some in the u.s. saying they're getting off of it cheap.

Here's a question.

Why did they do this?

They deliberately stripped down the codes to conceal the country of origin of these payments.

How lucrative the business with iran and sudan have been?

I suppose not lucrative enough to pay for the fine.


Fox why?

Mcgill to speculate.

One reason could be bnp historically has had strong ties to the whole mediterranean and arabic region.

It is also possible within this large organization that this is down more to a number of individuals rather than it being an institutional practice.

It would really be surprising if the np -- bnp had in the statues earlier saying, we will make sure we pay money to iran or whatever, other than this just being potentially an issue at some local legal entity level or an issue with certain individuals within the group.

Having said that, it does seem to have gone the far up into the organization.

At best, leaves some question about the governance and control systems within the group.

I'm sure that is also part of the substantial fines their pain.

We're hearing 30 people may leave at this point.

I'm sure bnp will implement new control structures.

I'm sure there will also be part of this deal.

Let's not forget, the third component of this you will be a guilty plea in the u.s. that also leads to this large fine.

A guilty plea in the u.s., as far as i'm aware, can lead to a fairly dramatic consequences if there's not some give from the authorities in the u.s. we should remind everyone, credit suisse did also agreed to plead guilty.

Thank you so much for joining

This text has been automatically generated. It may not be 100% accurate.


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