BNP warns of US fines "far in excess" of $1.1bn provision

BNP Paribas warned that their fine by US authorities over possible breaches of US sanction rules could be "far in excess" of the $1.1bn provision it took in February, already one of the biggest taken by any lender so far.

Reporting a 5.2 per cent rise in net profit in the first quarter to €1.68bn, the Paris-based lender said that "a high degree of uncertainty exists as to the nature and amount of penalties that the US authorities could impose".

This follows reports overnight that US federal prosecutors are planning to press criminal charges against the bank for doing business with countries such as Sudan, Cuba and Iran that are under US sanctions.

BNP declined to comment on the reports of criminal charges, first from the New York Times, which stressed that prosecutors were keen to make sure the charges did not lead to the revocation of BNP's US banking licence.

The group has a significant presence in the US markets, with a retail operation called Bank of the West as well as an investment banking operation on Wall Street. Bank of the West reported €770m of pre-tax income last year.

BNP Paribas announced earlier this year that an internal investigation started in 2009 had discovered a large number of dollar payments involving "countries, persons and entities that could have been subject to economic sanctions under US law".

This prompted the group to take a $1.1 provision in February, leading to a three-quarters fall in quarterly net profit to €127m, its lowest since 2008, also highlighting the mounting legal problems being faced by the banking industry.

There have been a number of settlements of similar probes with UK and some European banks. Deutsche Bank has disclosed it is under investigation, and said it is co-operating.

HSBC, Standard Chartered and ING paid a total of $3.2bn combined fines in 2012 to settle US allegations of money-laundering and of carrying out improper transactions with countries such as Iran, Cuba, Libya, Myanmar and Sudan.

Other banks including Credit Suisse, Lloyds Banking Group and Barclays have also been fined over failures relating to US money laundering or sanctions breaches.

First quarter results from BNP otherwise beat net profit expectations, with the effect of the full takeover of Belgian subsidiary Fortis helping to balance out a writedown on assets exposed to Ukraine and increased loan losses in Italy.

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