CREDIT AGRICOLE NEAR ACCORD IN SANCTIONS PROBE

Jean-Paul Chifflet, chief executive officer of Credit Agricole SA.

Credit Agricole SA will probably reach an accord with U.S. officials in the next two months to settle a probe of the bank’s business in sanctioned countries including Iran, a person with knowledge of the matter said.

A resolution is expected to follow a settlement with Commerzbank AG, which is in discussions with U.S. authorities to pay about $650 million for breaking trade embargoes, the person said. Credit Agricole’s fine could be similar to Commerzbank’s, according to the person. Anne-Sophie Gentil, a spokeswoman for Credit Agricole, declined to comment.

Credit Agricole, with a market value of about 30.9 billion euros ($40 billion), fell as much as 0.7 percent and was little changed at 11.99 euros by 9:30 a.m. in Paris. The Bloomberg Europe Banks and Financial Services Index rose 0.4 percent.

Foreign banks have become increasingly eager to cooperate with U.S. prosecutors after a heavy fine was levied againstBNP Paribas SA (BNP) in June. Despite requests for leniency from the highest levels of French government, BNP had to pay about $9 billion and accept restrictions on certain activities. Prosecutors linked the tough terms to BNP’s lack of cooperation.

At least three other European banks -- Deutsche Bank AG, Societe Generale SA (GLE) andUniCredit SpA (UCG) -- are also being investigated for possible sanctions violations in various countries, according to company filings.

‘Voluntary’ Review

Credit Agricole Chief Executive Officer Jean-Paul Chifflet said Aug. 5 that the bank was “entering a phase of explanations on the case with the authorities” after having conducted a “voluntary” internal review of certain dollar transactions between 2003 and 2008.

He also said Credit Agricole had set aside 1.1 billion euros for total litigation costs, declining to say whether any amount had been provisioned for the sanctions probe.

The investigations are being handled by the Justice Department, the Federal Reserve, the Manhattan District Attorney’s Office and New York’s Department of Financial Services. Spokesmen from those agencies declined to comment.

The banks’ troubles date back to 2007, when the Justice Department began a concerted push to punish companies that were violating U.S. embargoes against countries including Iran, Sudan and Cuba. After first probing companies exporting military equipment, prosecutors turned their focus to the banks financing the trade and processing payments from the blacklisted countries.

Since President Barack Obama took office in 2009, at least 22 banks have been penalized for allegedly doing business tied to sanctioned countries. The fines have escalated.

Standard Chartered Plc agreed to pay a total of $667 million in 2012 over sanctions violations. That same year, London-based HSBC Holdings Plc (HSBA) agreed to pay $1.9 billion to resolve a sanctions-violation investigation and allegations of being used by Mexican drug gangs to launder money.

The case against BNP marked the pinnacle of prosecutors’ efforts: the $9 billion penalty is almost twice as much as the other 21 penalties combined.

Bloomberg News