BNP Paribas SA pleaded guilty in a criminal probe over breaking U.S. sanctions against rogue nations and is expected to face a penalty that includes a ban on handling certain U.S. dollar transactions for a year.
France’s largest bank also will pay an $8.9 billion US penalty, a record figure that French legislators had protested as potentially harmful to France’s banking system.
But in a partial reprieve, the bank has been granted a six-month period to prepare for the ban on dollar clearing, which could affect oil and gas trading which was once one of BNP’s biggest trading interests. The ban will take effect in 2015, according to the Financial Times.
The Paris-based bank’s board met over the weekend to approve the deal.
BNP entered a guilty plea in state court in New York City and is expected to do the same Tuesday in federal court, officials said..
The U.S. Justice Department, U.S. attorney Preet Bharara, Manhattan district attorney Cyrus Vance Jr.and Benjamin Lawsky, superintendent of New York’s Department of Financial Services, laid charges against BNP Paribas over violations of sanctions against Sudan, Iran and Cuba, mostly dating from 2002 to 2009.
On Friday, BNP's chief executive Jean-Laurent Bonnafé wrote to staff preparing them for the financial hit.
"I want to say it clearly: we will be fined heavily," Bonnafé said in an interview with French news channel i-Telé.
BNP has made plans to slash its dividend and sell billions of euros of bonds this week to cover the fine.
It also has been in talks with rival banks to secure U.S. dollar clearing services for its clients in the period it is banned.
As part of the settlement, BNP will fire more than a dozen employees, many from its Geneva office, where violations of the sanctions took place.
Analysts said BNP has strong enough capital reserves to weather the fine, but that its earnings could be hit by the ban on U.S. dollar trading.