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BNP Paribas: Record fine as expected

July 1, 2014

BNP Paribas (Attractive*) agreed to plead guilty to U.S. sanctions violations and pay USD 8.97bn. France’s largest bank admitted that it processed banned transactions from 2004 to 2012 involving Sudan, Iran and Cuba. The bank will be barred from U.S. dollar-clearing operations in 2015 for its oil and gas commodity finance business, as expected. The bank plans to clear U.S. dollars through a third party. BNP Paribas’s punishment is the heftiest levied for violating U.S. sanctions. On a more positive side for BNP, the bank will retain its U.S. licenses and expects “no impact” on its operational or business capabilities. Nevertheless, the bank said it will take a charge of EUR 5.8bn in Q2 but intends to pay a full-year dividend of EUR 1.50 a share, unchanged from last year. In our opinion, BNP Paribas will be heavily burdened by this exemplary fine, but with the uncertainty out of the way, the bank can focus on business.

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