The board of French BNP Paribas is split over strategy in the face of a likely huge fine by US authorities on charges of sanctions-busting, with the fate of its chief executive on the line, the Wall Street Journal reported on Thursday. The split is also complicating the way the bank communicates with French authorities, the newspaper reported, hours before President Francois Hollande was expected to plead the bank's case with US President Barack Obama during a dinner in Paris.
BNP Paribas is a leading European bank, and French authorities have stepped up their alarm this week at the prospect that it could be fined more than $10 billion (7.35 billion euros) by US justice authorities for allegedly breaking sanctions against Iran, Sudan and Cuba between 2002 and 2009. The bank's board is split, with some top executives holding that it erred in doing business in areas covered by sanctions, and those who maintaining that it did nothing wrong and is the victim of over-zealous US officials, the paper said citing people close to the matter.
The debate turned on whether one or more heads should fall at the bank, including that of chief executive Baudouin Prot, to assuage the US authorities, the report said. "The debate within the bank centres on whether a high-level resignation, including by Mr Prot, would be appropriate," the newspaper said, citing people familiar with the issue.
There is also concern in the bank that it has not set aside nearly enough money in provisions to meet the cost of any fine, which could also be accompanied by restrictions on the bank's ability to do business in dollars. The report said that BNP Paribas said in February it had provisioned $1.1 billion, but subsequently warned that this might fall substantially short of a potential fine. This week the French government has stepped up its defence of the bank, with Hollande saying he would raise the matter with Obama because the penalties being reported would be "disproportionate".
His office said that he had already protested to Obama in a letter in April and that the two presidents had discussed the matter since by telephone. French Foreign Minister Laurent Fabius was more outspoken, saying that the issue could affect negotiations between the European Union and the United States on a trans-Atlantic trade pact.
The dispute "raises a very, very big problem", he said on Tuesday. French officials argued that such a big fine on such a big bank could destabilise the financial system and curtail lending and so dampen recovery which would not be in the interests of the United States. There is also concern that other banks are in the sights of US authorities for a similar reason, but analysts are sceptical that the knock-on effects on the banking system would be so significant.
The governor of the French central bank, Christian Noyer, reported to have visited New York last week to plead the case for BNP Paribas, had said earlier that the bank had done nothing wrong by French, EU and United Nations sanctions rules, and that the United States had changed its interpretation of the rules during the period in question.
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