PARIS (Reuters) – French President Francois Hollande said on Wednesday he will raise concerns about a possible $10 billion-plus U.S. fine on BNP Paribas BNPP.PA that he considers “disproportionate” with his U.S. counterpart Barack Obama.
France’s biggest listed bank is under investigation by U.S. authorities over whether it evaded U.S. sanctions, mainly on Sudan, Iran and Syria, between 2002 and 2009, and Hollande said he would tackle Obama on the potential fine when they meet on Thursday.
“I don’t know if he wants to talk about it, but I will talk to him about it,” Hollande told reporters during a trip to Warsaw.
French officials have said Obama, who will visit France for Friday’s 70th anniversary of the World War Two D-Day landings in Normandy, would dine with Hollande at a restaurant in Paris.
U.S. authorities allege BNP Paribas stripped out identifying information from wire transfers so they could pass through the U.S. financial system without raising red flags. Sources familiar with the matter say any fine could top $10 billion.
Hollande confirmed he had written to Obama in April to express concern at the possible fine, one of several interventions he had made. “I’ve put forward arguments on the disproportionate character,” he said.
“For now, no decision has been taken,” he added. “We are in a phase where BNP is doing the negotiating, not France. I am just here to put across a certain number of arguments.”
Hollande’s intervention takes the drum roll of French concern over reports of the possibly huge fine to the highest level, following increasingly forthright objections from senior French ministers.
U.S. Secretary of State John Kerry said the case and any penalty were a matter for the justice system. However, speaking on a visit to Beirut, he told reporters: “We obviously want whatever it is to be fair and to reflect an appropriateness to whatever it is that is alleged to have taken place.”
Standard and Poor’s agency put the bank’s A+ long-term credit rating on Wednesday on negative creditwatch – meaning it might be downgraded – pending the outcome of the U.S. inquiry.
Last week rival agency Moody’s placed BNP’s A1 rating on a negative outlook. Moody’s analysts said they were worried about the risk that BNP might lose revenue and clients should it plead guilty or face a criminal charge. They also expressed concern about the negative effect of any settlement on the bank’s capital position.
BNP has said publicly only that it is in discussions with U.S. authorities about “certain U.S. dollar payments involving countries, persons and entities that could have been subject to economic sanctions”.
It has set aside $1.1 billion for the fine but told shareholders it could be far higher than that. Last month it also said it had improved control processes to ensure such mistakes did not occur again.
French Finance Minister Michel Sapin called the possible fine “inequitable” in a France 2 TV interview on Wednesday.
Sapin said was neither “possible nor acceptable for us to intervene in the justice proceedings”, but criticised what he too described as a disproportionate fine.
“Whether it’s a French bank or a European bank, we don’t want American justice conducted in an inequitable way. The amount we’ve seen in the press, from our point of view, is inequitable,” he said.
“Every time a fine of this nature is imposed, if it’s disproportionate to the facts, for whatever bank it is, it has consequences for the bank and for its capacity to lend.”
On Tuesday, Foreign Minister Laurent Fabius, whose portfolio includes trade issues, warned that the fine could jeopardise transatlantic free-trade talks.
Concern is growing at a European level about U.S. fines such as the one BNP Paribas may face and the case of Credit Suisse CSGN.VX which has pleased guilty to helping Americans evade taxes and agreed to pay $2.5 billion.
European Banking Authority (EBA) Chairman Andrea Enria told Reuters that the rising penalties faced by some lenders had become a concern generally for regulators and should be factored into this year’s “stress test” of banks’ financial health.
“The point of conduct risks, and of the impact of these fines and penalties … on a bank’s capital position, is a concern,” Enria said.