BNP Paribas shares tumble after US jury's Sudan verdict

Source: Reuters.

The federal jury in Manhattan on Friday ordered the French bank to pay a combined $20.5m to three Sudanese plaintiffs who testified about human rights abuses perpetrated under former President Omar al-Bashir's rule.

The bank said in a statement on Monday it intended to appeal the verdict, which it said should not lead to further claims.

'Result is clearly wrong', BNP Paribas says

Uncertainty about whether it could face further claims or penalties weighed on BNP Paribas shares on Monday, and would likely continue to do so, traders and analysts said.

The shares dropped as much as 10% at one point and were last down 8.7% - set for their biggest daily fall since March 2023.

Lawyers for the three plaintiffs, who now reside in the United States, said the verdict opens the door for more than 20,000 Sudanese refugees in the US to seek billions of dollars in damages from the French bank.

"BNP Paribas reaffirms that this result is clearly wrong and ignores important evidence the bank was not permitted to introduce," the bank said in its statement.

"Furthermore, this verdict is specific to these three plaintiffs and should not have broader application. Any attempt to extrapolate is necessarily wrong as is any speculation regarding a potential settlement," it added.

Nonetheless, analysts say the news will likely drag on the bank's shares in the coming months.

"A combination of a lack of visibility on the potential financial impact and next legal steps, a reminder of 2014 share price performance as well as a capital path that leaves relatively little room for error, is likely to hang over the shares until more visibility is provided," analysts at RBC Capital Markets said in a note.

In 2014, BNP Paribas agreed to plead guilty and pay an $8.97bn penalty to settle US charges that it transferred billions of dollars for Sudanese, Iranian, and Cuban entities subject to economic sanctions.

RBC said the bank's shares underperformed the sector by 10% from the first litigation provision booked in early 2014 to the settlement in June 2014.

Also weighing on the shares was S&P Global's surprise downgrade of France's credit rating on Friday. Societe Generale's shares fell 1.5%.

The broader European banking sector was up 0.5%.