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After a week of talks to minimise the cost of sanctions, French bank | :00:19. | :00:23. | |
BNP Paribas is expected to pay the biggest ever fine of a foreign bank, | :00:24. | :00:27. | |
for falling foul of US regulations. And, a critical deadline looms large | :00:28. | :00:33. | |
for Argentina. Its economy is on the brink of default but the government | :00:34. | :00:41. | |
says it wants to pay its debts. Welcome to World Business Report. | :00:42. | :00:50. | |
I'm Sally Bundock, also in the programme, the World Bank gets a | :00:51. | :00:55. | |
make`over. We'll have the details. Firstly, let's talk about one of | :00:56. | :00:59. | |
France's biggest lenders. French bank BNP Paribas is expected to pay | :01:00. | :01:03. | |
a record $9 billion fine for years of dealing with US`blacklisted Sudan | :01:04. | :01:06. | |
and Iran, in a case that has strained ties between Paris and | :01:07. | :01:11. | |
Washington. Today, US regulators are expected to dish out the largest | :01:12. | :01:15. | |
penalty on a foreign bank after a week of negotiations between lawyers | :01:16. | :01:20. | |
at BNP and in the US. So, how does this compare with other foreign | :01:21. | :01:23. | |
banks who have fallen foul of US authorities? | :01:24. | :01:27. | |
The most recent case was Credit Suisse, it was fined 2.6 billion | :01:28. | :01:30. | |
dollars in May this year for helping rich Americans avoid paying taxes, | :01:31. | :01:34. | |
and in 2012 HSBC had to pay 1.9 billion dollars to avoid prosecution | :01:35. | :01:36. | |
on charges similar to those facing BNP. But those fines are still way | :01:37. | :01:46. | |
below the amounts paid by US banks for actions leading to the financial | :01:47. | :01:52. | |
crisis. Wall Street's former poster child, | :01:53. | :01:55. | |
JP Morgan Chase, paid $13 billion in November 2013 to resolve a series of | :01:56. | :01:58. | |
US and state lawsuits over the sale of toxic mortgage`backed securities. | :01:59. | :02:07. | |
And the list goes on. Alexandre Baradez is Chief Market Analyst for | :02:08. | :02:16. | |
IG and he joins me now from Paris. Give us your take on this, the CEO | :02:17. | :02:22. | |
of BNP Paribas told his staff on Friday that they have a big penalty | :02:23. | :02:28. | |
coming, it will not affect their roadmap, how will it affect BNP | :02:29. | :02:33. | |
Paribas though? It could impact BNP Paribas, even if the CEO tells | :02:34. | :02:40. | |
employees that this measure will not impact the bank. The CEO warned | :02:41. | :02:47. | |
about heavy sanctions, and he talked about dysfunction, and mistakes made | :02:48. | :02:57. | |
from the US, we have seen the impact of it on the stock market. We have | :02:58. | :03:05. | |
seen BNP Paribas shares coming in at 50 euros per share, that is the | :03:06. | :03:09. | |
first impact. That will be heavy for the bike, they will maybe have two | :03:10. | :03:16. | |
plead guilty in this matter. `` they will have to. They will get a huge | :03:17. | :03:23. | |
fine, other about eight `10 billion, he will have to dismiss the | :03:24. | :03:29. | |
executive. `` they will have two. It could have a huge impact. This is | :03:30. | :03:38. | |
the financial sector in France, it is huge and returns, it takes a huge | :03:39. | :03:46. | |
percentage of the economy. With these sanctions, maybe if the market | :03:47. | :03:49. | |
knew of the sanctions before they were announced today after the | :03:50. | :03:53. | |
market closed, there will be a psychological impact on the next | :03:54. | :03:59. | |
day. Also, tell us about the ban on US dollar trading, how will that | :04:00. | :04:03. | |
work? How damaging is it for the bank? I think that this measure, if | :04:04. | :04:10. | |
confirmed, it could be the heaviest measure. BNP Paribas works in | :04:11. | :04:20. | |
Europe, Asia, and the US, and is working with huge US companies, they | :04:21. | :04:35. | |
work between two, `` they work between two continents, they work in | :04:36. | :04:41. | |
a specific area, like gas and oil, it could affect production and | :04:42. | :04:48. | |
Paris, and Singapore. The bank may lose clients, and work with | :04:49. | :04:59. | |
competitors. That is why I think the US authorities worked after the US | :05:00. | :05:05. | |
markets closed, the stock market could be affected. Thank you. | :05:06. | :05:12. | |
The timing is critical as to when an announcement comes through, when we | :05:13. | :05:17. | |
get that announcement, we will update you. Argentina is set to | :05:18. | :05:22. | |
enter a technical default for the second time in 15 years today, | :05:23. | :05:25. | |
unless it can strike a last minute deal with creditors.The South | :05:26. | :05:28. | |
American nation was ordered by a US court to make interest payments to | :05:29. | :05:31. | |
holders of its defaulted bonds, which it has been trying to avoid | :05:32. | :05:36. | |
through a lengthy legal battle. Argentina would lose access to | :05:37. | :05:38. | |
international markets if it defaults on its payments. Ignacio de los | :05:39. | :05:42. | |
Reyes reports from Buenos Ayres on the ongoing battle to escape the | :05:43. | :05:45. | |
problems of its original default, all those years ago. | :05:46. | :06:01. | |
Argentina defaulted on its debts after an economic meltdown that put | :06:02. | :06:08. | |
hunger and unemployment to the country. `` that brought. It decided | :06:09. | :06:13. | |
it could not pay its bills any more. Nearly 15 years later, it is | :06:14. | :06:20. | |
still dealing with the consequences. Things have changed since then. | :06:21. | :06:24. | |
Now, the country is nowhere near a crisis like the one in 2001. | :06:25. | :06:30. | |
Argentina says that this time, it has the money and the will to pay | :06:31. | :06:34. | |
its debts. But, what of the country just is not allowed to? `` what if. | :06:35. | :06:45. | |
Even though most have long since agreed to write off part of what | :06:46. | :06:51. | |
they are owed. The US courts have ruled that if Argentina pays | :06:52. | :06:55. | |
anyone, it has to pay the holdouts as well. Argentina says that it | :06:56. | :07:01. | |
cannot afford it. This leaves the country at the break of a technical | :07:02. | :07:05. | |
default, that some fear could hold foreign investment, harm growth, and | :07:06. | :07:12. | |
trigger unemployment. TRANSLATION: The impact of the 2001 crisis was | :07:13. | :07:16. | |
huge, many people felt it, and many people lost their jobs. Right now we | :07:17. | :07:20. | |
are starting to feel worried. Our salaries aren't like they used to | :07:21. | :07:24. | |
be. There's high inflation, and the economy does not fulfil our needs. I | :07:25. | :07:31. | |
think it is inevitable, the situation is really serious. We | :07:32. | :07:35. | |
should have dealt with debts earlier. We had to negotiate, but we | :07:36. | :07:41. | |
need luck from the other side well. This is a hard situation, I don't | :07:42. | :07:45. | |
want my grandchildren to suffer a crisis like my children lived | :07:46. | :07:50. | |
through some years ago. Argentina has the support of unlikely allies, | :07:51. | :07:56. | |
like the International Monetary Fund, as the country 's default | :07:57. | :08:01. | |
would set a dangerous precedent, with effects on other nations. This | :08:02. | :08:05. | |
is one of the problematic aspects of the ruling, it means that any | :08:06. | :08:12. | |
country contemplating default should be careful as to where it eventually | :08:13. | :08:16. | |
restructures the debt. I think that New York is the place to be avoided | :08:17. | :08:24. | |
now. That will have an impact on US financial markets. | :08:25. | :08:26. | |
Argentina has 30 days to negotiate with debt holders, and find a way to | :08:27. | :08:34. | |
avoid default. The government says that Argentina wants to pay, but is | :08:35. | :08:38. | |
figuring out how to do it before the economy grinds to a halt. | :08:39. | :08:44. | |
In other news: The Bulgarian president, Rosen Plevneliev has said | :08:45. | :08:46. | |
that he'll dissolve parliament and appoint an interim government. It's | :08:47. | :08:55. | |
the latest development in a crisis over the banking system. After talks | :08:56. | :08:58. | |
with the head of the central bank and the finance minister, the | :08:59. | :09:01. | |
president said money deposited with the country's banks is safe. Five | :09:02. | :09:05. | |
people have been arrested on suspicion of spreading rumours that | :09:06. | :09:11. | |
triggered a run on two banks. The World Bank has been making loans | :09:12. | :09:15. | |
to poor countries since it was founded in 1945. But the world's | :09:16. | :09:18. | |
most famous lender is now undergoing its first restructuring in nearly | :09:19. | :09:21. | |
two decades. Starting this week, it will divide itself into 14 global | :09:22. | :09:24. | |
practices that focus on areas such as energy and agriculture. Let's | :09:25. | :09:33. | |
have a look at the markets today in Asia, we are headed higher across | :09:34. | :09:39. | |
the board. We have a stronger yen against the dollar, that has been | :09:40. | :09:44. | |
helping trade in Japan a bit. We have had good trade figures from | :09:45. | :09:48. | |
Japan. Strong data in the month of May. We will see you later as we | :09:49. | :10:00. | |
look through the papers. It's the latest playground craze | :10:01. | :10:03. | |
being enjoyed not just by children in the UK ` but all around the | :10:04. | :10:12. | |
world. They're called Loom Bands, and if you have young children | :10:13. | :10:15. | |
you'll probably already know about the small rubber bands that can be | :10:16. | :10:18. | |
woven into wristbands, necklaces, key rings ` just about anything. | :10:19. | :10:24. | |
John Maguire has been finding out more. Right now, right around | :10:25. | :10:25. |