BNP Paribas shares rise after agreeing to pay US settlement

Shares in BNP Paribas rose more than 4 per cent yesterday after the French bank said it had sufficient funding to pay its landmark $8.9 billion (€6.5 billion) settlement with US authorities for conspiring to violate sanctions in Sudan and other countries.

It is the first time a big bank has pleaded guilty in a sanctions-busting case and represents a significant stiffening of penalties against global financial institutions, which have paid more than $100 billion in fines in recent years.

Switzerland’s financial regulator said yesterday it had concluded its own investigation into BNP’s Swiss subsidiary and its involvement in the sanctions violations, but it continued to probe to what extent the subsidiary’s directors or management were involved in the “misconduct”.

BNP’s shares were up €2 at €51.55 in early afternoon trading before closing at €51.33. They were still down over 16 per cent since the first $1.1 billion provision was taken in February, representing a decline in market value of more than €12 billion.

Lars Machenil, BNP's chief financial officer, said on an analyst call that he had not seen any "massive uncertainty" on behalf of its clients with respect to dollar clearing, despite the main details of the settlement being reported in the media for several weeks.

Mr Machenil also said there was “no rush” to issue additional tier one capital notes as a result of the fine but did not rule it out at some point in the future. He said the bank would pay a cash dividend of €1.50 per share – the same as last year.

He also said the bank’s oil and gas financing business, much of which will be prevented from clearing US dollar transactions for a year from January 2015 under the terms of the settlement with US authorities, represents “only 1 per cent” of its €39 billion of total revenues. Analysts at Citigroup said the “key risk” for BNP was the partial ban on dollar clearing. – (Copyright The Financial Times Limited 2014)