BNP Paribas is doing what it can to mitigate the damage caused by the US$8.9bn fine imposed on it by US authorities for breaching US trade sanctions. In an effort to placate investors in its shares, it has refused to zero its dividend and is playing down the damage the year-long ban on clearing in US dollars will do to its business. The punishment will clearly set the bank back a year in terms of its march to build capital levels, but it is far too early to determine the long-term effects of the sanctions. How painful the ban on clearing may prove, for example, is as yet uncertain, as is the impact of the bank's apparent decision to cut RWAs on its ability to win new business. The effort to underplay the effects of the punishment is entirely sensible from BNPP's point of view. But it poses a bit of a problem for the rest of the industry. Regulators around the wolrd are clearly searching for penalties that will truly hurt banks found to have misbehaved.
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