Credit Suisse and BNP Business with Banned Nations
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Credit Suisse and BNP Business with Banned Nations

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Both Credit Suisse Group AG (CSGN) and BNP Paribas SA (BNP) have misbehaved. Credit Suisse has been probed since 2011 for aiding U.S. citizens in evading their taxes. Additionally, BNP Paribas was probed recently for allegedly violating sanctions that prohibit business with barred countries. Usually the government cannot charge banks because they are too large and there is too much at stake for the economy if they go down. Thus, many of these probes are deal with by brokering settlements, basically a slap on the wrist for bad behavior from institutions. However, this time authorities are determined to take a tougher stance. U.S. and state prosecutors are looking into the case to really hold these institutions accountable for their actions against the country. The government has been leaking clues that this time things might be different. A U.S. Attorney from New York, Preet Bharara said recently that “a significant financial institution” will soon be charged.
Charging a bank of any proportional size in the U.S. is quite significant. Essentially a bank cannot go on if they are charged criminally. This is because they are unable to engage in business, like asset management if they are criminally charged for something. A large bank going down in the United States could be detrimental to the U.S. economy and the world, so it is clear that the government is not taking the decision of whether to charge these banks or not, lightly. The superintendent of New York’s Department of Financial Services, Benjamin Lawsky, is looking into both Credit Suisse and whether the Zurich-based bank helped clients evade New York taxes, as well as the probe against BNP Paribas. One of the options Lawsky has put on the table is suspending BNP Paribas ability to transfer their foreign clients money through New York branches. Such ideas have already caused the stocks of both banks to fall abroad. BNP Paribas fell in Paris more than it has in two months. The company is also preparing for possibly having to pay much more than the original $1.1 billion they put aside for paying off the U.S. Credit Suisse stock has also fallen abroad down to 27.91 francs in Zurich.

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