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Investing.com -- Barclays downgraded BNP Paribas SA (EPA:BNPP), France’s largest listed bank by assets, to “equal weight” from “overweight,” pointing to mounting uncertainty from ongoing Sudan-related litigation.
The move came after a U.S. federal jury in New York ordered BNP Paribas to pay $20.75 million in damages to three Sudanese-born plaintiffs who accused the bank of indirectly enabling atrocities committed under Omar al-Bashir’s rule by providing banking services between 1997 and 2011.
The downgrade,dated Wednesday , follows a sharp two-day selloff that erased about $9.6 billion in market value, leaving the stock at €67.93 as of Oct. 21.
BNP Paribas shares underperformed the European bank index by 10 % in that span. Barclays lowered its price target to €80 from €94 and raised its cost of equity assumption to 15.9 % from 13.6 %, citing the litigation’s uncertain duration and potential financial impact.
BNP Paribas said it would appeal the verdict, calling it “a ruling that ignored important evidence” and insisting that “there is no causation between our normal banking transactions and the plaintiffs.”
The bank emphasized that Swiss law applies to the case and argued that the decision “should not have broader application.” It added that “any attempt to extrapolate is necessarily wrong,” rejecting speculation about potential settlements.
Despite the downgrade, Barclays noted the stock remains one of the sector’s cheapest, trading at 6x 2026 earnings, compared with a 9x median for European peers.
Analysts expect earnings per share to grow 17 % in the second half of 2025 and 12 % annually in 2026 and 2027, supported by cost controls and steady capital generation. The bank’s CET1 ratio stood at 12.5 % in the second quarter of 2025, slightly ahead of consensus forecasts.
Still, Barclays said the ongoing litigation “is likely to prevent a re-rating for months.” The bank has not provisioned for potential costs linked to the case, and Barclays estimated that each $1 billion in potential charges could shave 11 basis points off the CET1 ratio and 7 % off 2026 earnings per share.
“Given the difficulty in quantifying the litigation risk,” the brokerage said, “we therefore have not included any, and instead reflect the risk via a higher CoE in our valuation.”
BNP Paribas’s market capitalization now stands at €76.8 billion, with a dividend yield of 3.81 % and a return on equity of 10.19 %. While Barclays maintained a Positive industry view on European banks overall, it added that the legal overhang and uncertainty around the appeal would likely limit BNP Paribas’s upside in the near term.