BNP Paribas SA has ample funding to back the fine and penalties it must pay under settlements with US authorities over sanctions busting, the French bank’s top executives told analysts on a conference call yesterday.
“Our liquidity situation, we always guided it as being ample,” chief financial officer Lars Machenil said. “At Q1 we had an overall excess of stable funding of 100 billion in euros out of which 50 billion was in US dollars. Yesterday when I looked into the systems ... that figure was basically unchanged at the end of the [second] quarter. This should allow having relevant cash for the settlement.”
Machenil added that there was “no rush” to seek the additional tier 1 funding that is seen as a key measure of bank stability as a result of having to pay the fine, set at almost US$9 billion under a settlement announced late on Monday in the US.
“It does not mean that we might not do something opportunistically, but there is no rush for Tier 1,” he said.
Machenil said the bank plans to offer cash dividends for this year at 1.5 euro per share, unchanged from last year.
The payout would be about 0.50 euros below what it might have been using a predicted payout ratio of 40.8 percent of earnings, he added. This will help keep core equity tier 1 ratio at about 10 percent.
The remarks came after the bank on Monday pleaded guilty to two criminal charges for violating US sanctions against Sudan, Cuba and Iran.
In an unprecedented move, US regulators also banned BNP for a year from conducting certain US dollar transactions, a critical part of the bank’s international business.
The authorities said the severe penalties were warranted because of BNP’s persistent and deliberate violations and desire to put profits first, even after US officials warned the bank of its obligation to police for illicit money flows.
The bank essentially functioned as the “central bank for the government of Sudan,” concealed its tracks and failed to cooperate when first contacted by law enforcement, US Deputy Attorney General James Cole said in announcing the settlement.
US authorities also found BNP Paribas had evaded sanctions against entities in Iran and Cuba, in part by stripping information from wire transfers so they could pass through the US system without raising red flags.
With its Sudanese clients, the bank admitted it set up elaborate payment structures that routed transactions through satellite banks to disguise their origin.
No individuals were charged on Monday, but US authorities said they have not wrapped up their probes.
“The case which BNP is pleading to now is against the corporation alone, but our investigation into potential individual culpability is continuing,” Manhattan District Attorney Cyrus Vance said in an interview.
BNP said it would take an exceptional charge of 5.8 billion euros (US$7.9 billion) in the second quarter of this year.
“We deeply regret the past misconduct that led to this settelement,” BNP chief executive officer Jean-Laurent Bonnafe told analysts and investors on a conference call yesterday.
“The failures that have come to light in the course of this investigation run contrary to the principles on which BNP Paribas has always sought to operate,” he added.
He said the bank would implement a significant strengthening of its internal controls and processes.
‘BIG LOSS’: This year might see the last generation of Huawei’s Kirin chips, as their production would stop next month because they are made using US technology Chinese tech giant Huawei Technologies Co (華為) is running out of processor chips to make smartphones due to US sanctions and would be forced to stop production of its own most advanced chips, a company executive has said, in a sign of growing damage to Huawei’s business from US pressure. Huawei, one of the biggest producers of smartphones and network equipment, is at the center of US-Chinese tension over technology and security. Washington last year cut off Huawei’s access to US components and technology, and those penalties were tightened in May, when the White House barred vendors worldwide from using US
’WHITE BOX’: The open platform would give local firms access to Cisco’s cloud-based mobile network to develop 5G telecom equipment and tap into the global market The Ministry of Economic Affairs (MOEA) yesterday introduced a new 5G “open lab” in collaboration with US-based information technology and networking giant Cisco Systems Inc to address the rapidly growing “white box” 5G networking equipment market. The open lab will be a platform where Taiwanese manufacturers can access Cisco’s cloud-based mobile network to develop their own 5G telecom equipment, such as small-cell base stations, network switches, modems and Internet of things (IoT) devices, a ministry statement said. The open platform would allow Taiwanese manufacturers to tap into the lucrative 5G telecom equipment market, which was previously monopolized by Nokia Oyj, Ericsson AB
CORPORATE SCANDAL: Cathay Life has invested NT$13.3 billion in Bank Mayapada since 2015, but the latest loss of NT$8.8 billion has completely written off its investment Cathay Life Insurance Co (國泰人壽) yesterday said it would recognize an investment loss of NT$8.8 billion (US$298.1 million) in Indonesia’s Bank Mayapada Internasional Tbk PT due to concerns about the lender’s operations amid a corporate scandal. The company said it would revise its earnings result for June, from a net profit of NT$6.52 billion to a net loss of NT$520 million, its first monthly loss over the past 17 months. After booking an investment loss of NT$5.2 billion in Bank Mayapada earlier this year, Cathay Life has so far recognized total investment losses of NT$14 billion in the lender, executive vice president
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported that revenue last month expanded 25 percent annually, but fell 12.8 percent month-on-month to NT$105.96 billion (US$3.59 billion). In the first seven months of this year, the chipmaker’s revenue surged 33.6 percent to NT$727.26 billion, compared with NT$544.46 billion a year earlier. TSMC has said it aims to grow its revenue by more than 20 percent this year. The company has since May 15 stopped taking new orders from Huawei Technologies Co (華為), its second-biggest customer after Apple Inc, due to the US’ restrictions on exports containing US technologies. TSMC has no plans to