French lender BNP Paribas SA (BNPQY.PK, BNP.L), which has agreed to pay $8.97 billion or 6.6 billion euros for U.S. sanctions violations, said it deeply regrets the past misconduct that led to this settlement. The company said the payment would result in an exceptional charge of 5.8 billion euros in the second quarter, which is beyond what has already been provisioned. Excluding the impact of the fine, the company expects to once again post solid results this quarter. BNP shares were gaining around 3 percent in the morning trading in Paris.
BNP Paribas, on Monday, reached the comprehensive settlement, including guilty pleas, hefty payment and temporary suspension, with U.S. federal and state authorities for conspiring with other entities to deliberately and repeatedly violate longstanding U.S. sanctions against Sudan, Cuba, and Iran.
While announcing first-quarter results in April, the company had warned of a potential penalty "far in excess of the amount of the provision", related to litigation regarding US dollar payments. Earlier, BNP Paribas had set aside $1.1 billion earlier towards this payment.
According to the New York State Department of Financial Services, between 2002 and 2012, BNP Paribas concealed more than $190 billion in U.S. dollar clearing transactions on behalf of Sudanese, Iranian, and Cuban parties, which were settled through its New York branch and other New York-based financial institutions.
In a statement, Jean-Laurent Bonnafe, CEO of BNP Paribas, said, "We deeply regret the past misconduct that led to this settlement. The failures that have come to light in the course of this investigation run contrary to the principles on which BNP Paribas has always sought to operate. We have announced today a comprehensive plan to strengthen our internal controls and processes, in ongoing close coordination with the US authorities and our home regulator to ensure that we do not fall below the high standards of responsible conduct we expect from everyone associated with BNP Paribas".
BNP Paribas also accepts a temporary suspension of one year starting January 1, 2015 of the U.S. dollar direct clearing focused mainly on the Oil & Gas Energy & Commodity Finance business line in certain locations.
BNP Paribas will maintain its licenses as part of the settlements, and expects no impact on its operational or business capabilities to serve the vast majority of its clients.
Based on its estimates, BNP Paribas expects its fully loaded Basel III CET ratio as at June 30 to be at around 10 percent, consistent with the Group's targets announced within its 2014-2016 business development plan. The bank currently intends to adapt its dividend for 2014 to a level equal to that of 2013 of 1.50 euros per share.
The company will set up a New York- headquartered new department called Group Financial Security US, part of the Group Compliance function, which will ensure that BNP Paribas complies globally with US regulation related to international sanctions and embargoes.
Further, all USD flows for the entire BNP Paribas will be ultimately processed and controlled via the branch in New York.
In Paris, BNP Paribas stock is gaining 1.31 euros or 2.63 percent, and trading at 50.85 euros.
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