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French warning over bank fine

Tuesday, June 03, 2014 - 01:55

Jun.03 - A diplomatic row between France and the US could be on the cards after the French government vowed to defend BNP Paribas if the bank is fined $10 billion-plus by US authotiries. Ciara Sutton reports.

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10 billion dollars would be a big hit for any bank - but for economically struggling France, a sting that size would be particularly painful. No surprise then that the country's foreign minister has vowed to defend the bank if US authorities decide to impose the hefty penalty on BNP Paribas. The French bank is accused of evading sanctions against Iran and other countries for years. Dominic Elliott of Reuters Breakingviews. SOUNDBITE (English) DOMINIC ELLIOTT, COLUMNIST, REUTERS BREAKINGVIEWS, SAYING: "We've got Fabius, the foreign minister of France, saying that this could halm lending to French companies and that could be a problem for France's economic recovery. I'm not sure I see that as a huge concern but I see that if you are a French politician, that's one thing you are going to try and make sure it doesn't come to." A fine that size would be nearly ten times what the bank's thought to have put aside. Investment Strategist at Devere Group Tom Elliott. (SOUNDBITE) (English) TOM ELLIOTT, INTERNATIONAL INVESTMENT STRATEGIST AT DEVERE GROUP: "It's a large fine baring in mind the bank probably made just over four billion euros last year. So it would create capital adequacy problems, it would have to raise some tier 1 capital to cope. I think the long term trend is for all banks that want to deal in dollars for their clients, are going to have to move their regulatory head offices to Washington." The bank says it's improved its control processes and it won't happen again. But US authorities may also freeze BNP's ability to clear US dollar transactions. That would hit the investment bank, as well as corporate and trade finance operations. And trade could be the key world here. Fabius has suggested a hefty fine could hinder talks between the United States and the EU. That could mean a few awkward conversations when the Presidents of both countries meet in France later this week.

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French warning over bank fine

Tuesday, June 03, 2014 - 01:55