PARIS (Reuters) - BNP Paribas , France's biggest bank, warned it might be hit with a U.S. fine "far in excess" of the $1.1 billion it set aside last year to cover litigation costs linked to a potential breach of U.S. sanctions on countries including Iran.
The warning is a fresh sign of mounting legal woes for the global banking industry, which has been hit with investigations for a string of alleged misdeeds, including fixing benchmark interest rates and manipulating foreign-exchange markets.
"There is uncertainty with respect to the amount and the nature of penalties the U.S. will impose," BNP Chief Financial Officer Lars Machenil told Reuters Insider television.
"It's not impossible that the fine is far in excess of the ($1.1 billion) provision."
When asked if the fine could reach $2 billion or $3 billion, BNP's Machenil said: "There is nothing more to say."
Past U.S. settlements have ensnared rivals such as Standard Chartered
BNP otherwise reported a better-than-expected 5.2 percent rise in first-quarter net income on Wednesday, with the effects of its full takeover of Belgian subsidiary Fortis last year helping to counterbalance writedowns on assets exposed to the Ukraine crisis and rising loan losses in Italy.
The bank has a robust capital base relative to peers with a core Tier 1 ratio of 10.6 percent at end-March.
BNP considers it has "excess capital" but will not use this to buy back shares at their current valuation, Machenil said.
"Today we are (trading) somewhere around book value...I don't think (buying back shares) is on the table," he said. "You're going to do share buybacks when your share price is substantially below book value."
(Reporting by Lionel Laurent and Matthias Blamont; Editing by James Regan)