eNEW YORK ( TheStreet) -- French bank BNP Paribas warned during its earnings conference call Wednesday that it could face fines in excess of $1.1 billion for breaching U.S. sanctions on Iran.
BNP Chief Financial Officer Lars Machenil said on the call that the bank had already set aside around $3.73 billion for potential litigation costs, including a $1.1 billion provision for possible U.S. sanctions.
"There is uncertainty with respect to the amount and the nature of penalties the U.S. will impose," Machenil told Reuters. "It's not impossible that the fine is far in excess of the ($1.1 billion) provision."
In February, BNP disclosed that it had booked large provisions for litigation after it found "a significant volume of transactions from 2002 to 2009 that could be considered impermissible under U.S. laws and regulations," the Wall Street Journal reported.
The probe found that people in the bank tried to cover up transactions with Iran by altering trades to remove coding that would identify their origin in a process known as stripping, the Journal said. U.S. authorities could also pursue criminal charges against individual employees, a person with knowledge told the paper.
In the past, the U.S. has hesitated to pursue criminal charges on large banks because of fear of destabilizing a bank and shaking investors' and depositors' confidence.
The market reaction to the news on Wednesday, however, wasn't drastic. Shares of BNP fell about 3.5%, and credit-default swaps on the company were little changed, suggesting the market doesn't feel the sanctions will put the company as a whole in jeopardy.