BNP Paribas fine could be followed by other banks

The company rose 3.6pc on the Paris Stock Exchange as investors took the news on dividends as a sign that trading has been running ahead of expectations, despite the clouds hanging over the bank.

On top of the fine, 13 senior employees including chief operating officer Georges Chodron de Courcel will leave BNP Paribas as a condition of the bank’s settlement, while another 32 will be demoted or see their pay cut.

It will also have to rely on a third party after a one-year ban on clearing transactions in US dollars, part of a series of punishments in order to avoid criminal prosecution.

US attorney general Eric Holder said the bank had gone to “elaborate lengths” such as employing a complicated network of satellite banks and removing markers from transactions “to conceal prohibited transactions, cover its tracks and deceive US authorities”.

Negotiations over the punishment reached the highest level, with French president Francois Hollande appealing to Barack Obama to intervene amid concerns about a severe penalty’s effect on the French economy.

Michel Sapin, France’s finance minister, said on Tuesday that BNP Paribas will “continue to be able to finance economic activity in satisfactory conditions”, while the country’s trade secretary Fleur Pellerin said the case did not put at risk negotiations over a trade deal between the European Union and the US.

However, Russian president Vladimir Putin said the US had offered to reduce the fine if France cancelled a contract to sell two warships to Russia, referring to the alleged offer as “blackmail”.

Speaking to investors, BNP Paribas chief executive Jean-Laurent Bonnafe said: “We deeply regret the past misconduct that led to this settlement.

“While the settlement is very significant it does not call into question the solidity of BNP Paribas.”

Announcing the punishment on Monday night, the Department of Justice said BNP Paribas had ignored repeated internal warnings when breaking sanctions over a period of 12 years. Mr Holder said this had aided countries involved in terrorism and human rights abuses, as well as threatening US security.

Both Moody’s and said they would maintain their credit ratings for the bank.

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