BNP Paribas warns U.S. sanctions fine could exceed provision

PARIS (Reuters) - BNP Paribas, France's biggest bank, said on Wednesday there was a risk that a possible fine for violating U.S. sanctions on countries like Iran could be significantly higher than the $1.1 billion euros it has provisioned for.

Chief Executive Laurent Bonnafe told a shareholders' meeting the bank will continue talks with U.S. authorities about probes into whether his bank had violated U.S. sanctions.

"We are doing what we can to ensure that such mistakes do not occur in the future," Bonnafe said.

He added he had met U.S. authorities last week in Washington and New York to discuss the matter.

The bank has already set aside around 2.7 billion euros ($3.7 billion) for litigation costs, including a specific $1.1 billion provision for a breach of sanctions.

Bonnafe said he could not say when a settlement may come.

A big U.S. fine could have ramifications for BNP beyond the immediate financial hit, as the bank is targeting expansion in North America as a key plank of a new strategy to raise revenue and profits outside its traditional European markets.

Earlier this year, BNP struck a confident tone on its outlook, promising a double-digit percentage rise in net earnings per share over the next three years and an increase in the dividend payout to 45 percent of earnings by 2016 from 41 percent in 2013.

BNP Paribas sees a return on equity of at least 10 percent in 2016, but that target does not take into account any potential U.S. fine.

(Editing by Geert De Clercq and David Holmes)