French Bank BNP Paribas Settles for $658 Million Over Risky Mortgages
French banking giant BNP Paribas has reached a settlement of $658 million with regulators to compensate customers who were not properly informed about the risks associated with their mortgages. The loans were taken out in Swiss francs, which are considered a safe haven currency during uncertain times. However, since the loans were repayable in euros, customers faced larger debts as the franc appreciated significantly against the euro from 2008 onwards.
BNP Paribas failed to communicate to its customers that they would be exposed to foreign exchange risk when repaying their loans. As a result, France’s Consommation, Logement et Cadre de vie (CLCV) pursued legal action to nullify the mortgage contracts. Under the settlement agreement, BNP Paribas will cancel all of the loans.
About 4,400 clients are expected to benefit from the settlement, with each receiving between 120,000 and 150,000 euros. This will amount to a total cost of approximately $658 million. BNP Paribas is currently the ninth-largest bank globally with over 2.849 trillion in assets under management.
Hot Take: BNP Paribas Pays Huge Settlement for Misleading Mortgage Customers
French banking giant BNP Paribas has agreed to pay a massive $658 million settlement to compensate customers who were not properly informed about the risks associated with their mortgages. The bank failed to disclose that customers faced foreign exchange risk due to loans repayable in euros but taken out in Swiss francs. The appreciation of the franc against the euro resulted in larger debts for customers. This settlement agreement comes after legal action by France’s CLCV association seeking to nullify mortgage contracts. The settlement will benefit approximately 4,400 clients, with each receiving between 120,000 and 150,000 euros. BNP Paribas is currently one of the world’s largest banks with over 2.849 trillion in assets under management.
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