BNP asks other banks for help as dollar clearing ban nears 

BNP Paribas has asked the help of at least three banks to clear certain energy transactions in U.S. dollars next year to make sure it can keep its energy trade finance division operating after a ban imposed for violating U.S. sanctions, according to sources.

The French bank made the requests to JP Morgan Chase and Co (JPM.N), Bank of America Merrill Lynch (BAC.N) and Citi (C.N) in July and August, sources said.

“Discussions are ongoing and the process is moving forward in a constructive way,” a source close to negotiations said.

However, experts say banks may be reluctant to clear for BNP Paribas because they could be opening themselves up to risk or the perception of risk which could hurt their reputations.

“Without getting help with the clearing, BNP will simply not be able to operate its energy trade finance division,” a source at a trading company which works with BNP said.

The energy trade finance business accounted for as much as 5 percent of BNP’s revenues in 2006 but was scaled back after the 2008 financial crisis and then again after the U.S. probe. It now only represents 1 percent of overall revenues although still accounts for hundreds of jobs.

Any bank temporarily taking on clearing on behalf of BNP would be able to charge a high rate for the service and they might also gain new clients if switching back to the French bank in 2016 proved complicated or otherwise less desirable

BNP mainly clears dollars on behalf of its own clients, and not on behalf of other banks. CHIPS is owned by 23 large commercial banks and supervised by the U.S. central bank, the Federal Reserve. FedWire is operated by the Fed.

Source: Reuters- BNP asks other banks for help as dollar clearing ban nears

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