BNP Paribas SA to cut dividend as it braces for $9-bn US penalty: reports

28 Jun 2014

BNP Paribas SA plans to slash dividend and sell billions of euros of bonds next week, The Wall Street Journal reported, as the French banking giant braces for a US fine for alleged violations lof sanctions against Iran.

The French lender does not intend to sell shares to boost its capital ratio following the penalty, which might work out to around $9 billion, according to the paper, which cited an unidentified person familiar with the matter.

The newspaper said, even as the details were being finalised, a settlement would probably be announced on 30 June.

BNP was up 0.6 per cent to €49.41 in Paris trading. The stock fell 13 per cent this year.

The French bank announced a dividend of  €1.50 a share for last year. The lender's 2015 dividend future, a security that reflecting amount investors estimate would be paid on 2014 profit, was down 25 per cent to 30 cents Friday on the Eurex Deutschland exchange in Frankfurt.

A settlement with the lender is being negotiated by prosecutors from the Manhattan district attorney's office and the US attorney's office for the Southern District of New York, along with the superintendent of New York's Department of Financial Services, Benjamin Lawsky.

The investigation relates to alleged sanctions violations involving Sudan, Iran and Cuba dating from 2002 to 2009, though some transactions continued until 2011, according to person with knowledge of the matter.

According to Reuters, the bank was expected to plead guilty to a federal criminal charge and pay nearly $9 billion as part of a larger settlement with multiple enforcement authorities that could be announced as early as next week, sources said earlier this week.

The bank also faced suspension for a year, from converting foreign currencies into dollars on behalf of clients in some businesses for as Reuters quoted sources familiar with the matter as saying.

(Also see: France to defend BNP Paribas, terms possible $10 billion US fine ''unreasonable'' ).