US Jury Orders BNP to Compensate in Sudan Case

PARIS, Oct 21 – BNP Paribas aimed to calm investors on Tuesday, asserting that their risk related to Sudan litigation was manageable. Nonetheless, analysts pointed out ongoing uncertainty as the bank’s shares fell once more.

Last Friday, a U.S. jury determined that BNP helped support the Sudanese government’s acts of genocide by offering banking services that violated American sanctions.

The court mandated the largest financial institution in the eurozone to pay a total of $20.5 million to three Sudanese plaintiffs who spoke out about human rights violations during the regime of former President Omar al-Bashir. This verdict raised fears about potential additional claims.

Following a significant drop in share prices on Monday, BNP’s stock declined further by 1.6% on Tuesday as investors processed the implications of the ruling, underperforming compared to the broader market and the banking sector.

Chief Financial Officer Lars Machenil conveyed during a discussion with analysts that the bank is not allocating any funds for potential Sudan-related legal issues in its upcoming third-quarter financial results due on October 28. He expressed optimism that the decision will be overturned on appeal.

Machenil also cited that Swiss law applies here, which might protect the bank. He explained, “Since the transactions occurred in Geneva, the US court ruled that Swiss civil law is relevant. Swiss law does not recognize such liability claims, and the Swiss government has confirmed that there’s no legal basis for this liability.”

Analysts, however, still have lingering questions. Morningstar analyst Johan Scholz remarked, “Although the bank perceives the risk of widespread claims as minimal, they cannot eliminate the possibility entirely. As long as uncertainty lingers, it will affect BNP’s share price.”

In a note to clients, traders from BNP mentioned that the CFO’s statements during the analyst call raised more questions than they answered.

No Precedent for Similar Cases

Machenil considered a class action lawsuit unlikely, characterizing it as a “case-by-case” scenario. “This is a private legal matter, not a regulatory fine or criminal sanction. The judgment pertains solely to the three plaintiffs and does not create a precedent for future lawsuits,” he noted.

He further explained that any individual claims related to the Sudan case would require separate hearings.

When asked about the potential number of additional plaintiffs, he stated, “I don’t have a crystal ball,” and avoided commenting on the length of the appeal process, suggesting it could take several months up to a year.

No Connection to 2014 Case

The lawyers representing the three plaintiffs, who currently reside in the U.S., noted that the ruling allows over 20,000 Sudanese refugees living in the U.S. to pursue billions in damages from French banks.

In July, the judge had separated the three individuals from a larger group of plaintiffs due to ethical conflicts. However, just before the trial commenced, the judge reinstated them as class representatives after improvements in their interrelations.

BNP Paribas had previously pleaded guilty in 2014 for breaching U.S. sanctions against Sudan, Cuba, and Iran, agreeing to pay an $8.9 billion fine. The bank faced accusations of funneling billions through the U.S. financial system on behalf of Sudanese companies, despite existing bans.

Machenil reiterated via phone, “This current case is unrelated to the 2014 criminal matter.”