US mega-fine on BNP bank unsettles Europe

A possible mega-fine on France's biggest bank BNP Paribas by the United States have raised concerns among French and European policymakers, who worry the penalty would take toll on the continent's financial system.
The fine, which could also include actions to cripple the bank's ability to provide services in dollars and reportedly amounts to more than 10 billion U.S. dollars, is meant to punish BNP Paribas for dealing with countries under U.S. sanctions.
Calling the penalty "disproportionate," French President Francois Hollande said he would defend BNP Paribas bank when he dines with U.S. President Barack Obama Wednesday night ahead of commemorations to mark the 70th anniversary of the D-Day landings.
He also confirmed that he had written to Obama in April to express concern at the possible fine. "For now, no decision has been taken," he added.
The possible fine comes at a time when European policymakers are encouraging banks to lend more to companies to facilitate their recovery. A fine of such magnitude would certainly hinder BNP Paribas' lending ability.
What worries European policymakers more is the domino effect the fine might incur, in which other banks, especially those that are also under investigation by U.S. authorities, would also hesitate to lend.
"We are working to protect the stability of the French financial system, to protect its ability properly to finance the economy" of France and Europe, Finance Minister Michel Sapin said on Tuesday.
Rating agency Standard and Poor's Wednesday put the bank's A+ long-term credit rating on negative creditwatch, meaning it might be downgraded.
Last week, Moody's placed BNP's A1 rating on a negative outlook, citing a potentially significant loss of its client business in the United States if it was subject to a criminal charge