France's Credit Agricole SA has agreed to pay the U.S. authorities $787 million US to settle allegations that it illegally moved money through the U.S. financial system in violation of sanctions against Iran, Sudan, and other countries, according to a person familiar with the matter.
Credit Agricole has already made provisions totalling 1.6 billion euros ($1.82 billion US) against litigation costs after taking a further 350 million euro charge related to the U.S. investigation in its second-quarter results.
The deal is likely to be announced on Tuesday, the person said.
Deferred prosecution agreement
The payment is to be made under a so-called deferred prosecution agreement with the bank, another source said.
Under such agreements the accused party is subjected to closer supervision for a certain period of time, typically three years, and if they do not abide by the terms of the deal, criminal charges could be filed.
Credit Agricole declined to comment. Representatives of the U.S. Department of Justice, U.S. Treasury Department, Manhattan District Attorney's office and New York Department of Financial Services declined to comment.
Credit Agricole is the latest foreign bank to settle charges of violating U.S. sanctions, with altogether about a dozen international banks, mostly European, having been hit by U.S. penalties totalling $14 billion since 2009.
BNP Paribas, France's largest bank, last year paid a record-breaking $8.9 billion in penalties and pleaded guilty to criminal charges over sanctions-busting. It was also banned from conducting certain U.S. dollar transactions for a year.
"They (Credit Agricole) have learnt from experience," said a person familiar with how the BNP Paribas case evolved.
Banks typically have been accused of stripping information on wire transfers to the United States so payments connected to Iran or other sanctioned entities would not be detected.
Specifically Credit Agricole was accused of violating U.S. sanctions against Iran, Sudan, Myanmar and Cuba between 2003 and 2008, the first source said.
Shares in Credit Agricole were down 1 percent at 11.03 euros by 1138 GMT, when the Stoxx Europe 600 banking sector index was down 0.9 percent.
"An amount of close to 700 million is rather the low end of the range expected by the market of up to 1 billion," a Paris-based share market trader said of the expected settlement payment.
"I would hope that the provision in the balance sheet would be largely used to fund the settlement. It's a big number, but it should be already factored in in the capital position," an analyst said.
Meawnhile Italy's UniCredit SpA, France's Societe Generale, and Germany's Deutsche Bank AG remain under investigation by the U.S. authorities, sources told Reuters.