- POSTED: 12 Jun 2014 20:02
A major dispute between the United States and France over penalties threatening BNP Paribas took a sudden turn on Thursday with the removal of a top executive at the French bank.
PARIS: A major dispute between the United States and France over penalties threatening BNP Paribas took a sudden turn on Thursday with the removal of a top executive at the French bank.
The departure of chief operating officer Georges Chodron de Courcel signals a concession to ward off a massive fine, reported possibly to exceed $10 billion (7.4 billion euros).
At the beginning of June, various sources told AFP that the bank would sack Chodron de Courcel to placate US judicial authorities.
The New York banking regulator Benjamin Lawsky called several months ago for him to be dismissed, AFP has learnt.
The Wall Street Journal newspaper has reported that US authorities had also obtained the removal of another senior executive at the bank, Vivien Levy-Garboua, former head of internal controls in North America and now an adviser to the top management.
Altogether, Lawsky is said by various sources to have demanded that a dozen bankers should lose their jobs over the incriminated transactions.
The announcement on Thursday is a crucial development in the case, since France has said that what it considers the threat of "disproportionate" penalties against the bank on charges of sanctions busting could upset talks on a vast free-trade pact between the 28-member European Union and United States.
But the bank presented the sudden ending of Chodron de Courtcel's functions, on June 30, as retirement with effect from September 30 after a lifelong career of 42 years at the bank, without mentioning the charges by US judicial officials.
The dispute is a hot subject for France, and Chodron de Courcel, aged 64, is a high-profile figure in French banking and industry, and is also a cousin of Bernadette Chirac, wife of former French President Jacques Chirac.
President Hollande has raised the matter several times with US President Barack Obama, the latest occasion being over a dinner in Paris last week even though Obama has made clear he cannot intervene in a judicial process.
The case turns on charges that between 2002 and 2009 BNP Paribas, a leading French and European bank, broke sanctions against Iran, Sudan and Cuba by carrying out dollar transactions with those countries.
The stakes are high for the bank, which risks a huge fine, and maybe a temporary suspension of dollar transactions or even of its US banking licence.
France argued that the stakes are high also for the international financial system, and for bank lending and economic recovery in Europe, saying that the knock-on effects of such penalties, and possibly against other banks under investigation, would be widespread and deep.
The governor of the Bank of France, Christian Noyer, who says that the bank did nothing wrong, has also warned of knock-on effects.
And the former president of the European Central Bank Jean-Claude Trichet has said that a huge fine could trigger shock waves through the financial system.
The share price of BNP Paribas, which has provisioned only about 1.1 billion euros for the case, has not been unduly affected by the recent developments.
Some analysts are sceptical about the extent of such repercussions. And US authorities have imposed higher fines on banks.
In 2012, about 10 US banks paid a total of $78 billion in fines to settle litigation on a wide range of charges.
Some reports had said that the BNP Paribas board was split over how to ward off the US authorities.
Some top executives argued that the bank had done nothing wrong under French and European law, a line backed by Noyer, and others saying that the bank should not have ventured into such transactions.
In the statement Chodron de Courcel, who had spent his entire 42-year-career at the bank, said: "I am proud to have contributed to building this outstanding group, which has now become one of the European leaders in its industry."