As may have heard, BNP Paribas is probably going to write a check for something in the range of $8 billion to $10 billion in order to settle allegations that it violated U.S. sanctions against Iran, Sudan, and a few other places. And while a couple billion or so to make allegations of wrongdoing go away would be but pocket change (and has historically been regarded as no big deal to banks forking over that amount to, say, stop being the poster child for massive tax fraud), senior executives at BNP are actually starting to think 8 or so billion dollars is kind of a lot of money.
Analysts, investors and some BNP Paribas officials are growing increasingly concerned about the possible financial ramifications of penalties the French bank is facing for allegedly violating U.S. sanctions. Shares in the bank ended down 2.4% in Paris, the second-biggest loser in the CAC-40 index, a day after The Wall Street Journal reported that U.S. authorities are pushing for BNP to pay more than $10 billion to resolve the investigation, which would be one of the largest penalties the country has ever levied on a single bank. The cost of insuring BNP’s debt against possible default rose, while its bond prices fell. The prospect of an 11-figure penalty has raised the specter of BNP needing to scale back some of its ambitious international growth plans, curtail its dividend payments or sell shares to replenish its capital buffers, analysts say. BNP officials, while hoping to negotiate a smaller settlement, share some of those market concerns and are scrambling to come up with contingency plans, according to a person familiar with the bank’s thinking.