BNP Paribas
From Wikipedia, the free encyclopedia
BNP Paribas S.A.
Motto: The bank for a changing world
Headquarters in Paris
Type
Socit Anonyme
Traded as
Euronext: BNP, OTCQX: BNPQY
Industry
Financial services
Predecessors
Banque Nationale de Paris S.A.
Banque de Paris et des Pays-Bas S.A.
Founded
23 May 2000
Headquarters
Boulevard des Italiens, Paris, France
Area served
Worldwide
Key people
Baudouin Prot (Chairman)
Jean-Laurent Bonnaf (CEO)
Products
Asset management, consumer banking, corporate
banking, credit cards, investment
banking, mortgage loans, private banking, wealth
management
Revenue
47.86 billion (2011)
[1]
Operating
income
9.677 billion (2011)
[1]
Profit
6.050 billion (2011)
[1]
Total assets
1.965 trillion (2011)
[1]
Total equity
85.62 billion (2011)
[1]
Employees
200,000 (2011)
[1]
Website
www.bnpparibas.com
BNP Paribas is a French bank and financial services company with headquarters in Paris, and a
global headquarters in London.
[2][3]
It was formed through the merger of Banque Nationale de
Paris (BNP) and Paribas in 2000 and is one of the largest banks in the world. Based on 2012
information BNP Paribas was ranked as the fourth-largest bank in the world, as measured by total
assets, by Bloomberg and Forbes.
[4][5]
BNP Paribas escaped the 200709 credit crisis relatively unscathed reporting a 3 billion net profit
for the year of 2008, and 5.8 billion for 2009, both years boosted by profits from trading in
its Corporate and Investment Banking division.
[6]
BNP Paribas has one of the highest credit ratings in
its peer group with the long term debt of the group currently
ranked A+ by S&P, A2 by Moody's and A+ by Fitch.
[7]
The firm is a universal bank split into three strategic business units: Retail Banking, Corporate and
Investment Banking and Investment Solutions (which includes Asset Management, custodial
banking, and real estate services).
[6]
BNP Paribas's four domestic markets are France, Italy, Belgium,
and Luxembourg. It also has significant retail operations in the United
States, Poland, Turkey, Ukraine, and North Africa, as well as large-scale investment banking
operations in New York,London, Hong Kong, and Singapore.
[6]
BNP Paribas was awarded the 2012 Bank of the Year award by the International Financing
Review (IFR), Thomson Reuters' leading financial industry publication. TheIFR awards are a key
industry benchmark and Bank of the Year is the top honour awarded.
[8][9][10]
In June 2014, BNP Paribas pleaded guilty to falsifying business records and conspiracy, having
violated U.S. sanctions against Cuba, Iran, and Sudan. It agreed to pay an $8.9 billion fine, the
largest ever for violating U.S. sanctions.
[11][12]
Contents
[hide]
1 History
o 1.1 Background and heritage as two banks: 18202000
1.1.1 BNP (Banque Nationale de Paris)
1.1.2 Paribas (Banque de Paris et des Pays-Bas)
o 1.2 Founding of BNP Paribas till date: 2000present
2 Business units
o 2.1 Retail banking
2.1.1 Domestic markets
2.1.2 United States
2.1.3 Emerging markets
o 2.2 Corporate and investment banking
o 2.3 Investment solutions
3 Events in 2005
o 3.1 Major shareholders
o 3.2 Sports Sponsorships
o 3.3 Main subsidiaries
3.3.1 Retail banking
3.3.2 Other subsidiaries
4 Controversies
o 4.1 Check processing
o 4.2 Nuclear investments
o 4.3 Sanctions violations
5 Notable current and former employees
6 See also
7 References
8 External links
History[edit]
Background and heritage as two banks: 18202000[edit]
BNP (Banque Nationale de Paris)[edit]
Main articles: Comptoir national d'escompte de Paris and Banque nationale pour le commerce et
l'industrie
On 7 March 1848 by the French Provisional Government founded the Comptoir national d'escompte
de Paris (CEP) in response to the financial shock caused by the revolution of February 1848. The
upheaval destroyed the old credit system, which was already struggling to provide sufficient capital
to meet the demands of the railway boom and the resulting growth of industry. The CEP grew
steadily in France and overseas, although in 1889 there was a crisis in which it was temporarily
placed in receivership.
Separately on 18 April 1932, the French government replaced Banque nationale de crdit (BNC),
which failed as a result of the 1930s recession, with the new bank Banque nationale pour le
commerce et l'industrie(BNCI). The former banks headquarter and staff were used to create BNCI
with fresh capital of 100 million francs. The bank initially grew rapidly through absorbing a number of
regional banks that got into financial trouble. After the Second World War it continued to grow
steadily. It grew its retail business in France and its commercial business overseas in the French
colonial empire.
After the end of the Second World War, the French state decided to "put banks and credit to work for
national reconstruction". Ren Pleven, then Minister of Finance, launched a massive reorganization
of the banking industry. A law passed on 2 December 1945 and which went into effect on 1 January
1946 nationalized the four leading French retail banks: Banque nationale pour le commerce et
l'industrie (BNCI), Comptoir national d'escompte de Paris (CNEP), Crdit Lyonnais, and Socit
Gnrale.
In 1966, the French government decided to merge Comptoir national d'escompte de
Paris with Banque nationale pour le commerce et l'industrie to create one new bank called Banque
Nationale de Paris (BNP).
The bank was re-privatised in 1993 under the leadership of Michel Pbereau as part of a second
Chirac government's privatization policy.
[13][14]
Paribas (Banque de Paris et des Pays-Bas)[edit]
See also: Paribas and Bischoffsheim family
Banque de Paris et des Pays-Bas (Paribas) was established on 27 January 1872, through the
merger of Banque de Crdit et de Dpt des Pays-Bas, which had been established in 1820
by Louis-Raphal Bischoffsheimin Amsterdam, and Banque de Paris, which had been founded in
1869 by a group of Parisian bankers. It went on to develop a strong investment banking business
both domestically in France and overseas.
During the period 1872 to 1913, it was involved in raising funds for the French and other
governments as well as big businesses through a number of bond issues. It helped the French
government raise funds during theFirst World War and raised further capital and expanded into
investments into industrial companies during the Great Depression. It stagnated and lost assets
during the Second World War.
After World War II, it missed the nationalisation of the other French banks due to its status as
an investment bank and managed to take advantage of that by expanding its operations overseas. It
also directs its activity towards businesses and participates in the development and restructuring of
French industry, including names such as Groupe Bull and Thomson-CSF.
The bank was nationalized in 1982 by the government of Pierre Mauroy under Franois
Mitterrand as part of a law that nationalized five major industrial companies, thirty-nine registered
banks, and two financial companies, Suez and Paribas. It was re-privatized in January 1987 by
the Chirac government.
In the 1990s Paribas had an active policy of acquisitions and divestiture. This included selling
the Ottoman Bank to Dou Holding, and setting up the joint venture lending company Cetelem in
Germany. It sold Crdit du Nord to Socit Gnrale and in 1998 it merged with Compagnie
Bancaire, renaming the bank with the official name Compagnie Financire de Paribas.
Founding of BNP Paribas till date: 2000present[edit]
In 1999, BNP and Socit Gnrale fought a complex battle on the stock market, with Socit
Gnrale bidding for Paribas and BNP bidding for Socit Gnrale and counter-bidding for Paribas.
BNP's bid for Socit Gnrale failed, while its bid for Paribas succeeded leading to a merger of
BNP and Paribas one year later on 22 May 2000.
On 9 August 2007, BNP Paribas became the first major financial group to acknowledge the impact of
the sub-prime crisis by closing two funds exposed to it. This day is now generally seen as the start of
the credit crisisand the bank's quick reaction saved it from the fate of other large European banks
such as UBS.
[15][16]
On 6 October 2008, BNP took over 75% of troubled bank Fortis' activities in Belgium, and 66%
in Luxembourg, in exchange for the Belgian government becoming the new group's major
shareholder. The sales of the Fortis shares was suspended by a court order from the Court of
Appeal on Friday 12 December
[17][18]
On 14 December 2008, BNP announced it could lose 350 million as a victim of the Madoff fraud.
[19]
In the end of January, the Belgian government and BNP negotiated for a 75% partnership in Fortis
Bank Belgium. Fortis Insurance Belgium would be reintegrated in Fortis Holding.
On 11 February, Fortis' shareholders decided that Fortis Bank Belgium and Fortis Insurance Belgium
should not become property of BNP Paribas. However the acquisition was completed and BNP
Paribas took 75% share holding and renamed the new subsidiary BNP Paribas Fortis. After this only
Fortis Insurance International was left in Fortis Holding and this was renamed as Ageas, a business
that had Insurance all over Europe and Asia. The remaining Fortis Bank Netherlands was in the
hands of the Dutch Government which merged it with other ABN AMRO holdings it already owned
under the name ABN AMRO.
In May 2009, BNP Paribas became the majority shareholder (65.96%) of BGL (formerly Fortis Bank
Luxembourg), the State of Luxembourg retaining 34% making BNP the eurozone's largest bank by
deposits held.
[20]
On 21 September, the bank's registered name was changed to BGL BNP Paribas and in February
2010, BGL BNP Paribas became the 100% owner of BNP Paribas Luxembourg. The transfer was
finalised on 1 October 2010 with the incorporation of BNP Paribas Luxembourg's business in the
operational platforms of BGL BNP Paribas.
[21]
In 2013 BNP Paribas was awarded the Bank of the
Year award by The International Financing Review ("IFR"), Thomson Reuters' leading financial
industry publication. The IFR awards are a key industry benchmark and Bank of the Year is the top
honour awarded.
[8][9][10]
BNP Paribas reached an agreement in December 2013 to acquire Rabobank's Polish unit BGZ Bank
for around $1.4 billion.
[22]
In September 2014, BNP completed the purchase of BGZ Bank for a final
fee stated in the media to be $1.3 billion.
[23]
Business units[edit]
Retail banking[edit]
Retail banking is BNP Paribas' largest business unit representing 45% of its 2009 revenues and
employing 59% of the group's headcount. Its operations are concentrated in Europe, especially in
the group's three domestic markets of France, Italy (where it operates as Banca Nazionale del
Lavoro (BNL), and Belgium (as BNP Paribas Fortis). The group also owns an American
subsidiary BancWest which operates as Bank of the West in the western United States and First
Hawaiian Bank in Hawaii. BNP Paribas's Europe Mediterranean group also runs large retail banks in
Poland, Turkey, Ukraine, and northern Africa.
BNP Paribas is the largest bank in the Eurozone by total assets and second largest by market
capitalization according to The Banker magazine, just behind Banco Santander. It employs over
201,000 people, according to the bank as of 31 December 2009, of which 80,000 work in Europe,
and maintains a presence in 87 countries.
Domestic markets[edit]
France: BNP Paribas runs one of France's largest retail banking networks with 2,200 branches
and over 3,200 ATMs. In Paris alone the bank has 187 agencies. BNP Paribas serves over 6
million French households and 60,000 corporate customers. In 2009 The French Retail Banking
unit (FRB) had revenues of 6.1 billion (15.2% of total group's), income of 1.5 billion (15% of
total group's), and employs 31,000 people (15.4% of total group's workforce)
[6]
Italy: In 2006 BNP Paribas purchased Banca Banca Nazionale del Lavoro (BNL), Italy's sixth
largest bank at the time. In 2009 BNL had 810 branches in Italy, 2.5 million individual clients,
and over 150,000 corporate clients. It grossed 2.9 billion in revenue (7.2% of the total group's)
and 540 million of net income (9.3% of the total group's), and employs around 13,000
employees (6.5% of the total group's).
[6]
Belgium: BNP Paribas acquired BNP Paribas Fortis when it acquired the retail banking assets of
the Belgian lender Fortis in 2009. This deal also included Fortis's subsidiaries in Poland and
Turkey, now grouped in the "Europe Mediterranean" division.
United States[edit]
In the United States, BNP Paribas owns BancWest, which in turn operates retail banking
subsidiaries Bank of the West and First Hawaiian Bank. Bank of the West operates in 19 Western
US states (where it ranks as the 7th largest bank by assets), while First Hawaiian is Hawaii's leading
bank with a 40% market share in deposits. Together the two banks operate 710 branches, and
service 5 million clients.
The two banks were merged into BancWest 1998, and BNP Paribas took full control of the combined
entity in 2001.
The group has a strong presence on niche markets such as lending for marine and recreational
vehicles, church lending, and agribusiness. In 2009 BancWest had 2.1 billion in revenues (5.2% of
the total group's), and 11,200 employees (5.5% of the total group's headcount).
[6]
BancWest lost
223 million in 2009 largely due to its exposure in the subprime mortgage crisis in
California, Arizona, and Nevada.
Emerging markets[edit]
In 2009 BNP Paribas reorganized its retail banking divisions renaming its "Emerging Markets" group
the "Europe Mediterranean" group. This change was made because after the integration of Fortis
Bank's Polish and Turkish subsidiaries, BNP Paribas's emerging market activities are now heavily
concentrated in Eastern Europe and the southern half of the Mediterranean basin.
BNP Paribas is a member of the Global ATM Alliance, a joint venture of several major international
banks that allows customers of the banks to use their ATM card or check card at another bank within
the Global ATM Alliance with no ATM surcharges when traveling internationally. Other participating
banks are Barclays (United Kingdom), Bank of America (United States), China Construction
Bank (China), Deutsche Bank (Germany), Santander Serfin
(Mexico), UkrSibbank (Ukraine), Scotiabank (Canada) and Westpac (Australia and New Zealand).
[24]
Corporate and investment banking[edit]
Main article: BNP Paribas CIB
One of BNP Paribas' London Trading Floors.
In addition to its retail activities, BNP Paribas is also a leading global investment bank through its
Corporate & Investment Banking unit. Although present in all investment banking markets, it is
recognized as a global leader in derivatives trading, structured finance, and project finance.
The firm is divided into 6 key business areas:
Fixed Income: BNP Paribas' fixed income team helps companies hedge their exposure
to foreign exchange, interest rate, and credit risks, primarily though the structuring and sale
of derivative products such as interest rate and foreign exchange swaps, foreign exchange
options and credit derivatives. It also trades in these markets on behalf of clients or for its
own proprietary account. On an average day, a quarter of a trillion dollars in fixed income
instruments are traded at BNP Paribas Americas fixed income trading floor located just blocks
from the NASDAQ MarketSite in Manhattan, New York City.
[25][26]
Equity & Derivatives: BNP Paribas' Equity & Derivatives team helps companies manage their
risks and investment portfolios with equity derivatives such as options, futures, and swaps, as
well as highly complex, customized solutions such as structured products. It also trades in these
markets on behalf of clients or for its own proprietary account.
Commodity Derivatives: BNP Paribas' Commodity Derivatives team helps clients hedge their
exposure to commodity risk though the structuring and sale of commodity futures and
OTC commodity swaps. It also trades in these markets on behalf of its clients
or proprietary account.
Investment Banking: BNP Paribas' Corporate Finance team performs most of the
traditional investment banking functions of the group including mergers and
acquisitions advisory, and equity raising operations such as Initial Public Offerings (IPOs), rights
issues, and convertible bond issues.
Structured Finance: BNP Paribas' Structured Finance group offers clients project
finance solutions, export financing, syndicated loans, and financing for acquisitions
and leveraged buyouts.
Corporate & Transaction Group: BNP Paribas' Corporate and Transaction group offers clients
simplified flow banking services including trade finance, international cash management, and
basic hedging solutions.
In 2009 BNP CIB earned 12.2 billion in revenue (30% of total group's), 4.4 billion in pre-tax
income (48.9% of total group's), and 18,000 employees (9.0% of total group's headcount.)
[6]
Investment solutions[edit]
BNP Paribas's "Investment Solutions" unit contains its asset management, custodial banking, real
estate, insurance, online brokerage, "Personal Investors" and wealth management activities.
[6]
On 11 June 2008, BNP Paribas formally signed the final terms of an agreement to purchase the
Prime Brokerage Services division of Bank of America Securities. The sale is widely believed to be
completed by the end of the 3rd Quarter, 2008.
Asset Management: The asset management activities of BNP Paribas are grouped into BNP
Paribas Investment Partners. In 2009 BNP Paribas IP had 2,400 employees in more than 70
countries and 395.1 USD Bn of assets under management (AuM) according to the Scorpio
Partnership Global Private Banking Benchmark 2014 an increase of 11% on the 2013 figure.
[27]
Events in 2005[edit]
On 23 September 2005, BNP Paribas was set to take a 20 percent stake in China's Nanjing City
Commercial Bank, a Chinese official and state press reports said. "BNP is going to sign a deal with
us to buy a stake next month," an official from Nanjing City Commercial told AFP. The Shanghai-
based Oriental Morning Post said BNP would pay up to US$100 million, although the bank official
said the figure was incorrect. He declined to give further details. The French newspaper La
Tribune reported in August 2005 that BNP Paribas had talked to four Chinese commercial banks
Ningbo, Wuxi, Nanjing and Suzhouand was prepared to invest US$50100 million. "We've talked
to different financial institutions, but only BNP showed its good faith. It was not easy for us to reach
an agreement," the Nanjing City Commercial Bank official said. BNP Paribas refused to comment.
The International Financial Corporation, the investment arm of the World Bank, already owns 15
percent of Nanjing City Commercial Bank, which has regulatory approval to list on the country's
domestic stock markets.
Major shareholders[edit]
France (17%)
[28]
Belgium (11.6%)
AXA insurance company
Customers
Employees
General Mediterranean Holdings
Sports Sponsorships[edit]
BNP Paribas is one of the most important sponsors of the Tennis French Open in Roland
Garros stadium since 1971
Main subsidiaries[edit]
Retail banking[edit]
BNP Paribas France (more than 2 200 branches)
Banque de Bretagne (France Brittany)
BancWest (Bank of the West & First Hawaiian Bank in the USA)
BMCI (Morocco)
BNP Paribas Egypt (Egypt)
Banca Nazionale del Lavoro (BNL) (Italy)
Turk Ekonomi Bankasi (TEB) (Turkey)
BNP Paribas Fortis (Belgium, Germany, Poland, Turkey)
BGL BNP Paribas (Luxembourg)
Sahara Bank (Libya)
UkrSibbank (Ukraine)
BCI Mer Rouge Djibouti
Banque de Wallis et Futuna
Banque Internationale pour le Commerce et l'Industrie du Sngal (Senegal)
Bank Gospodarki ywnociowej (Poland)
BNPA Paribas Sofia Bulgaria Branch
Other subsidiaries[edit]
Alfred Berg
Atisreal renamed BNP Paribas Real Estate
BNP Paribas Arbitrage
BNP Paribas Assurances with Cardif, Pinnacle
BNP Paribas Asset Management
BNP Paribas Primebrokerag
BNP Paribas Leasing Solutions
[29]
with Arval,
[30]
car leasing and Artegy
BNP Paribas Securities Services
BNP Paribas Wealth Management with Isinger de Beaufort, BNP Paribas Private Banking
Cetelem
LaSer UK with Galeries Lafayette
CortalConsors
FundQuest
SBI Life Insurance Company Limited a joint venture insurance company with State Bank of
India, India's largest financial service company, owned by the government of India
Geojit BNP Paribas
L'Atelier BNP Paribas (fr)
Creation Consumer Finance
[31]
Lafayette Services
[31]
BNP Paribas Personal Investors Luxembourg
[32]
SAIB-BNP Paribas Asset Management
Controversies[edit]
Check processing[edit]
In 2010 the French government's Autorit de la concurrence fined BNP and 10 other banks
384 million for colluding to charge unjustified fees on check processing, including extra fees during
the transition from paper check transfer to "Exchanges Check-Image" electronic transfer.
[33]
On 19
January 2011 BNP sued Russian grain trader, OOO Rosinteragroservis, and its subsidiary OAO
Kubankhlebprodukt, claiming US$20 million in debts and penalties.
[34]
Nuclear investments[edit]
BNP Paribas is the biggest investor in the nuclear sector as a bank, according to Profundo, with
more than 13.5 billion in nuclear investments. On 23 October 2011 Greenpeace organised a
protest against BNP Paribas in 24 French cities.
[35]
Sanctions violations[edit]
On 30 May 2014, The Wall Street Journal reported that the United States Department of Justice was
negotiating with BNP Paribas over the size of a fine plus a possible guilty plea by the bank for
violation of U.S. regulations regarding the bank's evasion of sanctions. The Department of Justice
was seeking a fine in excess of US$10 billion, which was expected to be reduced to $8 or $9 billion
upon negotiation.
[36]
Initial indications said that up to $100 billion from the sanctioned countries of
Sudan, Iran, and Cuba had been laundered by BNP Paribas.
[37]
On 1 July, BNP Paribas pleaded guilty to falsifying business records and conspiracy in a New York
state court, in connection to these violations. It is also expected to plead guilty to violating money
laundering laws in federal court.
[38]
It agreed to pay $8.9 billion, the largest fine ever for violating U.S.
sanctions, substantially exceeding the previous record of $1.9 billion.
[11][38]
Additionally, BNP Paribas
will not be able to transact certain US dollar dominated transactions for one year. The fine exceeded
the bank's 2013 annual income ($6.4 billion) and the $1.1 billion it previously allocated for the
anticipated fine.
[38][39]
Failure to cooperate with the multi-year investigation was cited as a significant
factor in the size of the fine. Additionally, BNP Paribas continued to process the sanctioned
transactions after the investigation began. About 30 employees left the bank as a result of the
investigation.
[38]
After the fine was announced, BNP said it would be "just fine" and that it had "a comprehensive plan"
to avoid similar violations in the future. The company's stock, which had fallen 12% since news of
the investigation leaked, rose 4% on the announcement.
[38][39]
BNP Paribas will use a third-party to
clear its US transactions to comply with the transaction ban. Standard & Poor's said it was reviewing
the bank's financial standing in light of the fine and penalties for a possible downgrade.
[38]
Russian president Vladimir Putin said in an interview that the US government is using this case
to blackmail France for the Mistral sale to Russia. He argues that the high fine and sanctions
towards the French bank is a US punishment for France's decision to not stop this
deal.
[40]
Previously, former European Central Bank president Jean-Claude Trichet said a large fine
was neither fair nor proportionate to the violations and could disrupt the global banking system.
[38]
