Crédit Agricole, the French mutual bank, has agreed to pay $787 million to settle allegations that it violated US sanctions against countries including Iran and Sudan.
The penalties will spark anger in France, where they have been denounced by the Socialist government as unfair.
Crédit Agricole is reported to have escaped a criminal record after securing a delayed prosecution agreement, which means that it will come under supervision without having to plead guilty.
Criminal charges will only be pressed if the bank fails to implement a cleanup.
The deal will enable it to avoid the fate of BNP Paribas, France’s largest bank, which last year was forced to pay a record $8.9 billion over similar allegations.
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Crédit Agricole was able to conclude a more favourable settlement partly because the volumes it dealt with were lower and partly because it cooperated swiftly, according to US prosecutors.
The French institution, which has traditionally served farmers, was accused of violating US sanctions against Iran, Sudan, Burma and Cuba between 2003 and 2008 after branching out into international finance.
It was suspected of hiding information on wire transfers so that the involvement of embargoed countries went undetected.
News of the settlement was greeted with a shrug on the Paris stock market, where investors had been expecting a figure nearer $1 billion.
The bank has already provisioned €1.6 billion to cover litigation costs in connection with the case, including €350 million in the second quarter of this year.
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However, the settlement generated a fresh political backlash in France, where the newspaper Le Figaro pointed out that seven of the 15 biggest fines imposed by the US since 2012 had been paid by European banks.
It said continental financial institutions were being “veritably targeted by the American and British authorities”.
Société Générale, the French bank, UniCredit, of Italy, and Deutsche Bank, are also under investigation in the US over allegations of sanctions violations. Société Générale has set aside €1.3 billion in connection with the case.
In March, Commerzbank paid €1.45 billion to end an inquiry into claims that it had broken US sanctions and money laundering laws. In 2012, HSBC paid €1.9 billion over similar allegations.