J. García Carrión, founded in Jumilla in south-eastern Spain in 1890, is in dispute with the French lender over foreign exchange transactions of a cumulative notional amount of tens of billions of euros. He claims the loss-making transactions were inappropriately carried out with one of his former senior executives between 2015 and 2020, according to people familiar with the matter.
BNP is one of several banks subject to complaints from corporate clients in Spain over alleged abusive sales of foreign exchange derivatives, which have pushed some companies into financial difficulty.
Deutsche Bank has launched an internal investigation into allegations of abuse that led to the departure of two senior executives this week, Louise Kitchen and Jonathan Tinker.
An internal JGC investigation found that BNP made more than 8,400 foreign exchange transactions with the company over the five-year period, or about six per business day.
This level of activity was well above what the company would need for normal currency risk hedging on international wine exports, the people said, adding that the Spanish company had shared the results of its internal investigation with BNP.
While the vast majority of the loss-making trades were in Euro-dollar swaps that moved against the bank, some involved currency pairs where JGC has little or no trading, such as the Euro-Swedish krona.
As a direct consequence, the company with turnover of 850 million euros realized about 75 million euros in cash losses during these five years, while BNP could have realized more than 100 million euros. income through transactions, the people added. Most of the transactions were concluded through trading offices in London.
Executives have demanded compensation for at least part of the losses, arguing that traders or BNP’s compliance department should have spotted and reported the disproportionate level of transactions and profits from a single customer, according to several people in the know events.
JGC says the transactions were designed as betting on the forex markets, rather than hedging, and is considering legal action to try to get some of the money back, one of the people said.
“BNP Paribas very strictly respects all regulatory obligations relating to the sale of derivatives and foreign exchange instruments,” the bank said in a press release. “We don’t comment on customer relationships. “
JGC declined to comment.
Separately, the Spanish wine producer is suing Goldman Sachs in the High Court in London for partial reimbursement of $ 6.2 million in losses caused by exotic currency derivatives. Goldman maintained that the products were not too complex for a multinational company with hedging needs and were entered into with full risk disclosure.
In Madrid, the wine company also lodged a complaint against a former senior executive who was responsible for signing the loss-making agreements. JGC alleges that this person conducted the transactions 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 encouragement 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 traders in London and Madrid circumvented EU rules and convinced hundreds of Spanish companies to buy sophisticated forex derivatives they did not need or did not understand.
The Financial Times reported that the German bank has settled many complaints against it privately and has avoided going to court.
People familiar with the matter told the FT that the departures of Kitchen and Tinker were linked to the investigation into the alleged abuse, 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.