France on Tuesday warned of potential consequences for transatlantic trade talks if the U.S. pushed ahead with a $10 billion-plus fine for BNP Paribas, the country's biggest bank.
"This poses a very, very big problem," declared Laurent Fabius, foreign minister, in the first public comments by President François Hollande's Socialist government since it emerged that U.S. regulators were poised to hit BNP for breaking U.S. sanctions on Iran, Sudan and Cuba.
"We are in talks with the U.S. for a transatlantic partnership," Mr Fabius said in a television interview. "This trade partnership can only be established on a basis of reciprocity . . . One cannot imagine that reciprocity can be the rule if at the same time there is a decision of this type." Such a "unilateral" punishment would be "completely unreasonable", he added.
France is among those pressing for financial services to be included in the trade talks, which would amount to biggest regional trade agreement ever struck. Officials in Brussels and Washington sought to play down the threat to the talks, though analysts said Mr Fabius's comments were significant.
"His opinions matter... We need the French to be on board for this to happen," said Garrett Workman, who tracks the EU-U.S. talks for the Washington-based Atlantic Council.
French officials fear that a big fine and potential suspension of dollar trading would damage BNP's capital base, curb its ability to lend to the struggling French economy and lose it international customers. The bank is concerned that a temporary suspension would in effect become permanent, people familiar with the matter say.
They have also sought to portray the case as a potential threat to the wider European economy. "If this spreads to other European banks it could have a cost for Europe," said one official.
The government has stressed it does not dispute the right of the U.S. authorities to punish BNP. "If there is an error or a violation, then it's normal that there is a fine, but the fine has to be proportionate and reasonable," Mr Fabius said.
But his intervention indicated Paris is concerned its message is not getting across.
The French pleas have so far fallen on deaf ears at the U.S. Treasury Department, with Treasury secretary Jack Lew and other officials telling their French counterparts that it is up to prosecutors to decide the BNP fine, according to people with direct knowledge of the matter.
The tepid response is partly due to criticism of previous action. Many U.S. lawmakers slammed the Treasury department and other authorities for not imposing tougher penalties on banks accused of wrongdoing, including HSBC, which faced a $1.9 billion fine in 2012 for money-laundering allegations.
France has been lobbying hard behind the scenes, including via contact between Michel Sapin, the finance minister, and Mr Lew. Last week Christian Noyer, head of the Bank of France, flew to New York to meet Cyrus Vance, the Manhattan district attorney.
Mr Hollande is expected to raise the issue with Barack Obama when the U.S. president visits Paris on Thursday.