BNP Paribas

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BNP Paribas S.A.
Société Anonyme
Traded as Euronext: BNP, OTCQX: BNPQY
Industry Financial services
Predecessor
  • Banque Nationale de Paris
  • Paribas
Founded 1848; 176 years ago (1848) (as BNP)
1872 (as Paribas)
2000 (as BNP Paribas)
Headquarters Boulevard des Italiens, Paris, France
Area served
 Worldwide
Key people
 Jean Lemierre[1] (Chairman)
Jean-Laurent Bonnafé (CEO)
Products Asset management, consumer banking, corporate banking, credit cards, investment banking, mortgage loans, private banking, wealth management
Revenue €47.86 billion (2011)[2]
€9.677 billion (2011)[2]
Profit €6.050 billion (2011)[2]
Total assets €1.965 trillion (2011)[2]
Total equity €85.62 billion (2011)[2]
Number of employees
 200,000 (2011)[2]
Website www.bnpparibas.com

BNP Paribas (French pronunciation: ​[be ɛn pe paʁibɑ]) is a French multinational bank and financial services company with global headquarters in Paris.[3] BNP Paribas is one of the largest banks in the world. Based on 2012 information, BNP Paribas was ranked as the third-largest bank in the world, as measured by total assets, by Bloomberg and Forbes.[4][5] In 2010, It was the world's 18th largest corporation, according to the Fortune Global 500 list, the rankings are based on revenues, accounted for as the sum of gross interest income and gross non.[6] It was formed through the merger of Banque Nationale de Paris (BNP) and Paribas (see below for name origin) in 2000. The company is a component of the Euro Stoxx 50 stock market index.[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).[8] 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.[8]

BNP Paribas escaped the 2007–09 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.[8]

History

Name in brief

The Banque Nationale de Paris S.A. (BNP) resulted from a merger of two French banks (BNCI, Banque nationale pour le commerce et l'industrie, and CNEP, Comptoir national d'escompte de Paris) in 1966.

The Banque de Paris et des Pays-Bas S.A. (Bank of Paris and the Netherlands), or Paribas was formed from two investment banks based respectively in Paris and Amsterdam, in 1872. Les Pays-Bas ("The Low-Countries") is French for the Netherlands.

In May 2000, BNP and Paribas merged to form BNP Paribas, which is thus descended from four founding banking institutions.

Background and heritage as four banks: 1820–2000

BNP (Banque Nationale de Paris)

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Main articles: Comptoir national d'escompte de Paris and Banque nationale pour le commerce et l'industrie

On 7 March 1848, the French Provisional Government founded the Comptoir national d'escompte de Paris (CNEP) 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 crédit (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". René 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), Crédit Lyonnais, and Société Générale.

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 Pébereau as part of a second Chirac government's privatization policy.[9][10]

Paribas (Banque de Paris et des Pays-Bas)

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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 Crédit et de Dépôt des Pays-Bas, which had been established in 1820 by Louis-Raphaël Bischoffsheim in 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 the First 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 François 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 Doğuş Holding, and setting up the joint venture lending company Cetelem in Germany. It sold Crédit du Nord to Société Générale and in 1998 it merged with Compagnie Bancaire, renaming the bank with the official name Compagnie Financière de Paribas.

Founding of BNP Paribas till date: 2000–present

In 1999, BNP and Société Générale fought a complex battle on the stock market, with Société Générale bidding for Paribas and BNP bidding for Société Générale and counter-bidding for Paribas. BNP's bid for Société Générale 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 crisis and the bank's quick reaction saved it from the fate of other large European banks such as UBS.[11][12]

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[13][14]

On 14 December 2008, BNP announced it could lose €350 million as a victim of the Madoff fraud.[15]

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.[16]

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.[17] 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.[18][19][20]

BNP Paribas reached an agreement in December 2013 to acquire Rabobank's Polish unit BGZ Bank for around $1.4 billion.[21] In September 2014, BNP completed the purchase of BGZ Bank for a final fee stated in the media to be $1.3 billion.[22]

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 at that time.[23] BNP Paribas was fined $8.9 billion by US government for violating US sanctions, which was a record amount at that time.[23][24]

Business units

Retail banking

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

  • 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)[8]
  • 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).[8]
  • 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

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).[8] BancWest lost €223 million in 2009 largely due to its exposure in the subprime mortgage crisis in California, Arizona, and Nevada.

Emerging markets

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).[25]

Corporate and Institutional Banking

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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: Lua error in package.lua at line 80: module 'strict' not found.

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.)[8]

Investment solutions

BNP Paribas's "Investment Solutions" unit contains its asset management, custodial banking, real estate, insurance, online brokerage, "Personal Investors" and wealth management activities.[8]

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.[28]

Events in 2005

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 Suzhou—and was prepared to invest US$50–100 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

Main subsidiaries

Retail banking

Other subsidiaries

Controversies

Check processing

In 2010 the French government's Autorité 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.[34] On 19 January 2011 BNP sued Russian grain trader, OOO Rosinteragroservis, and its subsidiary OAO Kubankhlebprodukt, claiming US$20 million in debts and penalties.[35]

Nuclear investments

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.[36]

Sanctions violations

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.[37] Initial indications said that up to $100 billion from the sanctioned countries of Sudan, Iran, and Cuba had been laundered by BNP Paribas.[38]

On 1 July 2014, 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.[39] 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.[23][39] 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.[39][40] 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.[39] According to the FBI’s New York Field Office and Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI) “BNPP deliberately disregarded the law and provided rogue nations, and Sudan in particular, with vital access to the global financial system, helping that country’s lawless government to harbor and support terrorists and to persecute its own people. Today’s sentence demonstrates that financial institutions will be punished severely but appropriately for violating sanctions laws and risking our national security interests.”[41]

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.[39][40] 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.[39]

Russian president Vladimir Putin alleged, without providing any supporting evidence, 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.[42] 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.[39]

Sponsorship

BNP Paribas has been a major sponsor of tennis. In 1973 it became the major sponsor of the French Open, one of the four prestigious Grand Slam tournaments in the sport. In 2001 the bank began to sponsor the Davis Cup before becoming the title sponsor in 2002. Also in 2002 it became the sponsor of the Paris Masters, one of the nine high profile tournaments of the ATP World Tour Masters 1000 series. It also expanded to the United States in 2009 when it became the title sponsor of the Indian Wells Masters, a two-week extravaganza in the California desert which is also one of the nine Masters 1000 series.

Notable current and former employees

See also

References

  1. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  2. ↑ 2.0 2.1 2.2 2.3 2.4 2.5 Lua error in package.lua at line 80: module 'strict' not found.
  3. ↑ "Legal Information Retrieved on 25 October 2011. "Registered Office : 16, Bd des Italiens - 75009 Paris (France)"
  4. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  5. ↑ WORLD'S 50 BIGGEST BANKS 2012 | Global Finance. Gfmag.com (27 August 2012). Retrieved on 6 December 2013.
  6. ↑ http://www.bnpparibas.co.in/en/2010/07/23/bnp-paribas-18th-in-the-fortune-500-rankings/
  7. ↑ Frankfurt Stock Exchange
  8. ↑ 8.0 8.1 8.2 8.3 8.4 8.5 8.6 8.7 Lua error in package.lua at line 80: module 'strict' not found.
  9. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  10. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  11. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  12. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  13. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  14. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  15. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  16. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  17. ↑ "The history of Fortis BGL BNP Paribas", BGL BNP Paribas. Retrieved 9 September 2011
  18. ↑ Mullin, Keith. (15 February 2012) Bank of the Year: BNP Paribas | All Special Reports. IFRe. Retrieved on 6 December 2013.
  19. ↑ BNP Paribas digs deep at charity auction. Efinancialnews.com. Retrieved on 6 December 2013.
  20. ↑ International banking, finance, capital markets news & analysis | Euromoney magazine. Euromoney.com. Retrieved on 6 December 2013.
  21. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  22. ↑ BNP completes purchase of Bank BGZ from Rabobank. Reuters, 17 September 2014
  23. ↑ 23.0 23.1 23.2 Lua error in package.lua at line 80: module 'strict' not found.
  24. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  25. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  26. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  27. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  28. ↑ http://www.scorpiopartnership.com/knowledge/report/global-private-banking-benchmark-2014/
  29. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  30. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  31. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  32. ↑ 32.0 32.1 Lua error in package.lua at line 80: module 'strict' not found.
  33. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  34. ↑ Collusion in the banking sector, Press Release of Autorité de la concurrence, République Française, 20 September 2010, retrv 2010 9 20
  35. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  36. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  37. ↑ Justice Dept. Seeks More Than $10 Billion Penalty From BNP Paribas, Wall Street Journal, 30 May 2014
  38. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  39. ↑ 39.0 39.1 39.2 39.3 39.4 39.5 39.6 Lua error in package.lua at line 80: module 'strict' not found.
  40. ↑ 40.0 40.1 Lua error in package.lua at line 80: module 'strict' not found.
  41. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  42. ↑ Lua error in package.lua at line 80: module 'strict' not found.

External links

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