BNP Paribas agrees to pay $9 billion settlement over US sanctions violations

BNP Paribas has agreed to a record $9 billion settlement with US prosecutors over allegations of sanctions violations.

As part of the deal, France’s largest bank will plead guilty to two criminal charges of breaking US sanctions against trade with Sudan, Iran and Cuba.

The bank will also be prevented from clearing certain transactions in US dollars for one year from the start of 2015.

The settlement is the largest for such a case in US history.

“Between 2004 and 2012, BNP engaged in a complex and pervasive scheme to illegally move billions through the US financial system,” said US Attorney General Eric Holder in a press conference.

In doing so, BNP Paribas “deliberately and repeatedly violated longstanding US sanctions”, he said.

Eric Holder added that he hoped the settlement would serve as a warning to other companies that did business with the US that “illegal conduct will simply not be tolerated”.

As part of its agreement with US authorities, BNP agreed to fire and not re-hire 13 individuals who were associated with the sanctions violations.

BNP said as a result of the fine it would take an “exceptional charge” of 5.8 billion euros ($7.8 billion) in the second quarter of this year.

It said this was on top of the $1.1 billion it had already set aside to cover the cost of the US penalties.

However it said it expected “no impact on its operational or business capabilities”, and said it would post “solid results” for the second quarter.

BNP chief executive Jean-Laurent Bonnafe said resolving the issue was “an important step forward” for the bank.

“We deeply regret the past misconduct that led to this settlement,” he added.

In a conference call on Tuesday morning, Jean-Laurent Bonnafe explained that during the year in which the bank was banned from dollar clearing – converting payments from foreign currencies into US dollars – it would engage a third party to carry out the transactions.

Jean-Laurent Bonnafe added that as part of the settlement BNP Paribas would be able to keep its license to operate in the US.

The Swiss financial regulator, FINMA, also announced that it had closed its investigation into BNP Paribas operations in the country, following the US authorities’ decision.

FINMA said in a statement that BNP Paribas had “persistently and seriously violated its duty to identify, limit and monitor the inherent risks” relating to foreign transactions.

Shares in BNP Paribas rose more than 3% in morning trading, following assurances that the bank could weather the $9 billion fine.

France has been pressing the US over the size of the fine, which almost equals BNP’s entire 2013 pre-tax income of about 8.2 billion euros ($11.2 billion).