[ad_1]
BNP Paribas faces allegations that its traders have mis-sold billions of euros of harmful foreign exchange products to Europe’s largest wine exporter, the latest allegations in a wide-ranging controversy that has also surrounded Goldman Sachs and Deutsche Bank.
J. García Carrión, founded in Jumilla, in the south-east of Spain, in 1890, is in dispute with the French lender over foreign exchange transactions with a cumulative notional amount of tens of billions of euros. According to people who were familiar with the matter, it is alleged that the loss business was done inappropriately with one of its former senior executives between 2015 and 2020.
BNP is one of several banks facing complaints from corporate customers in Spain over the alleged mis-selling of foreign exchange derivatives, which pushed some companies into financial difficulties.
Deutsche Bank has launched an internal investigation of the alleged erroneous sale that this week caused the departure of two senior executives, Louise Kitchen and Jonathan Tinker.
An internal JGC investigation found that BNP conducted more than 8,400 foreign exchange transactions with the company over the five-year period, equivalent to about six every business day.
This level of activity was much higher than what the company would have needed for the normal coverage of the exchange rate risk of international wine exports, people said, adding that the Spanish company had shared the results. of its internal probe with BNP.
While the vast majority of loss transactions related to euro-dollar swaps against the bank, some were in currency pairs where JGC has little or no operations, such as the Euro-Swedish krona.
As a direct result, the company’s revenue of 850 million euros produced cash losses of about 75 million euros in these five years, while BNP could have obtained more than 100 million euros. of transaction revenue, people added. Many of the offers were made through trade counters in London.
Executives have demanded compensation for at least some of the losses, arguing that traders or BNP’s compliance department should have detected and reported a disproportionately high level of transactions and profits from a single customer, according to several people. with knowledge of events.
JGC says the deals were designed as bets on foreign exchange markets, rather than hedging them, and is considering a lawsuit to try to get some of the money back, one of the people said.
“BNP Paribas very strictly complies with all regulatory obligations relating to the sale of derivatives and foreign exchange instruments,” the bank said in a statement. “We don’t comment on customer relationships.”
JGC declined to comment.
In addition, the Spanish wine producer is suing Goldman Sachs in the London High Court for a partial refund of $ 6.2 million in losses caused by exotic currency derivatives. Goldman has argued that the products were not overly complex for a multinational company with coverage needs and that they were contracted with full disclosure of the risks.
In Madrid, the wine company has also filed a case against a former director who was responsible for signing the loss agreements. JGC alleges that this person carried out the operations in secret and covered them up internally by falsifying documents and misleading auditors.
In the London lawsuit, JGC alleges that its executive acted “with the intent and / or in accordance with the recommendations” of Goldman staff “for purposes of speculation rather than investment or hedging.”
Deutsche Bank has been investigating for months whether its London and Madrid operators circumvented EU rules and convinced hundreds of Spanish companies to buy sophisticated foreign exchange derivatives they did not need or understand.
The Financial Times has reported that the German bank has resolved many complaints filed against him in private and has avoided going to court.
People familiar with the matter told FT that Kitchen and Tinker’s outings were related to the investigation into the alleged mis-sale, which appears to have occurred in units that at the time were overseen by the two.
The bank declined to comment. Kitchen and Tinker did not respond to requests for comment.
[ad_2]
Source link
