BNP Paribas
BNP Paribas S.A. is a French international banking group. It is the world's 8th largest bank by total assets, and currently operates with a presence in 72 countries. It was formed through the merger of Banque Nationale de Paris and Paribas in 2000, but has a corporate identity stretching back to its first foundation in 1848 as a national bank. It is one of three major international French banks, along with Société Générale and Crédit Agricole. The group is listed on the first market of Euronext Paris and a component of the Euro Stoxx 50 stock market index, while it also included in the French CAC 40 index.
With both a retail banking section and investment banking operations, the bank is present on five continents. Its retail banking networks serve more than 30 million customers in its three domestic markets, France and Belgium through several brands such as BNL and Fortis. The retail bank also operates in the Mediterranean region and in Africa. In the Americas, it operates in the western United States as Bank of the West. As an investment bank and international financial services provider for corporate and institutional clients, it is present across Europe, the Americas, and Asia.
BNP Paribas is the largest French banking group and the largest bank in the Eurozone. It became one of the five largest banks in the world following the 2008 financial crisis. Despite some legal difficulties in the United States in 2014, including being fined the largest ever sum as reparation for violating US sanctions, it remains one of the ten largest banks worldwide.
History
Name in brief
The Banque Nationale de Paris S.A. resulted from a merger of two French banks – Banque nationale pour le commerce et l'industrie and Comptoir national d'escompte de Paris – in 1966.The Banque de Paris et des Pays-Bas S.A., or Paribas, was formed from two investment banks based respectively in Paris and Amsterdam, in 1872. Les Pays-Bas 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.
Heritage
BNP (Banque Nationale de Paris)
On 7 March 1848, the French Provisional Government founded the Comptoir national d'escompte de Paris 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, which failed as a result of the 1930s recession, with the new bank Banque nationale pour le commerce et l'industrie. 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, Comptoir national d'escompte de Paris, 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.
The bank was re-privatised in 1993 under the leadership of Michel Pébereau as part of a second Chirac government's privatization policy.
Paribas (Banque de Paris et des Pays-Bas)
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
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 23 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.
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
On 14 December 2008, BNP announced it could lose €350 million as a victim of the Madoff fraud.
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 of BGL, the State of Luxembourg retaining 34% making BNP the eurozone's largest bank by deposits held.
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. In 2013 BNP Paribas was awarded the Bank of the Year award by The International Financing Review, Thomson Reuters' leading financial industry publication. The IFR awards are a key industry benchmark and Bank of the Year is the top honour awarded.
BNP Paribas reached an agreement in December 2013 to acquire Rabobank's Polish unit BGZ Bank for around $1.4 billion. In September 2014, BNP completed the purchase of BGZ Bank for a final fee stated in the media to be $1.3 billion.
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.
Financial data
Corporate Identity
The BNP Paribas logo since 2000 is called the "courbe d'envol". The stars allude to Europe and universality. The transformation of the stars into birds conveys openness, freedom, growth, and the ability to change and adapt. The shape and movement of the curve places the logo in the universe of life. The green square symbolises nature and optimism.Business units
In 2015, the BNP Paribas Group was organized around two business areas:Retail Banking & Services, a global network of nearly 7,000 branches, comprising Domestic Markets and International Financial Services, and Corporate & Institutional Banking.
At the end of 2015, outstanding deposits stood at EUR700.3 billion and outstanding loans at EUR682.5 billion. The geographic breakdown of revenues was as follows: Europe, Americas, Asia Pacific and others.
Retail banking
Retail banking is BNP Paribas' largest business unit representing 72% of its 2015 revenues. Its operations are concentrated in Europe, especially in the group's two domestic markets of France, and Belgium. The group also owns an American subsidiary BancWest which operates as Bank of the West in the western United States. Previously the retail subsidiary operated First Hawaiian Bank, a position that BNP Paribas fully exited in 2019. 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 189,000 people, according to the bank as of 31 December 2015, of which 147,000 work in Europe, and maintains a presence in 75 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 had revenues of €6.1 billion, income of €1.5 billion, and employs 31,000 people
- Italy: In 2006 BNP Paribas purchased Banca Nazionale del Lavoro, 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 and €540 million of net income, and employs around 13,000 employees.
- 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
The two banks were merged into BancWest in 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, and 11,200 employees. 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, Bank of America, China Construction Bank, Deutsche Bank, Santander Serfin, Ukrsibbank, Scotiabank and Westpac.
Corporate and Institutional Banking
In addition to its retail activities, BNP Paribas is also a leading global investment bank through its Corporate & Institutional 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.
- 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, 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.
Investment solutions
BNP Paribas's "Investment Solutions" unit includes its asset management, custodial banking, real estate, insurance, electronic trading platform, "Personal Investors" and wealth management activities.On 11 June 2008, BNP Paribas formally signed an agreement to purchase the Prime Brokerage Services division of Bank of America Securities. The sale was expected to be completed by the end of the 2008 third quarter.
- Asset Management: The asset management activities of BNP Paribas are grouped under BNP Paribas Investment Partners. In 2009 BNP Paribas IP had 2,400 employees in more than 70 countries and US$395.1 billion in assets under management in 2014 according to the Scorpio Partnership, an increase of 11% over 2013.
Corporate Structure
Board of directors
As of 17 May 2020:- Jean Lemierre, former president of the European Bank for Reconstruction and Development
- Jean-Laurent Bonnafé, CEO of BNP Paribas
- Jacques Aschenbroich, chairman and CEO of Valeo
- Pierre-André de Chalendar, chairman and CEO of Saint-Gobain
- Monique Cohen, partner at Apax Partners
- Wouter De Ploey, CEO of ZNA
- Hugues Epaillard, BNP Paribas Real Estate executive
- Rajna Gibson Brandon, professor at the University of Geneva
- Marion Guillou, global food security academic
- Denis Kessler, chairman and CEO of SCOR SE
- Daniela Schwarzer, director at the German Council on Foreign Relations
- Michel Tilmant, former CEO of ING
- Sandrine Verrier, economic advisor
- Jane Fields Wicker-Miurin, former Prudential plc executive
Major shareholders
- Belgian State
- Blackrock Inc.
- Grand Duchy of Luxembourg
- Employees
- Retail shareholders
- European institutional investors
- Non-European institutional investors
- Other and unidentified
Main subsidiaries
Retail banking
- BNP Paribas France
- BNP Paribas Bulgaria
- BancWest
- BNP Paribas El Djazaïr
- BMCI
- Banca Nazionale del Lavoro
- Turk Ekonomi Bankasi
- BNP Paribas Fortis
- BGL BNP Paribas
- Hello bank!
- Sahara Bank
- Ukrsibbank
- BCI Mer Rouge Djibouti
- Banque de Wallis et Futuna
- Banque Internationale pour le Commerce et l'Industrie du Sénégal
- Bank BGŻ BNP Paribas
- Findomestic
- BNP PARIBAS Jordan
Other subsidiaries
- Alfred Berg
- BNP Paribas Arbitrage
- BNP Paribas Assurances with Cardif, Pinnacle
- BNP Paribas Investment Partners
- BNP Paribas Partners for Innovation
- BNP Paribas Personal Finance UK
- BNP Paribas Primebrokerag
- BNP Paribas Real Estate
- BNP Paribas Leasing Solutions with Arval, car leasing and Artegy
- BNP Paribas Securities Services
- BNP Paribas Wealth Management
- Cetelem
- Consors Finanz
- 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
- BNP Paribas Personal Investors Luxembourg
- Protection 24
- SAIB-BNP Paribas Asset Management
Controversies
Antisemitic allegations
In 2016 BNP reached a $40m settlement with a Jewish employee. The employee had been made to watch a training video. The film portrayed Adolf Hitler as the CEO of Deutsche Bank, one of BNP's competitors and the Nazi soldiers around him as Deutsche Bank executives. The video showed Hitler screaming at the soldiers. Also, his colleagues made a number of anti-semitic comments during his time at BNP Paribas.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.On 19 January 2011 BNP sued Russian grain trader, OOO Rosinteragroservis, and its subsidiary OAO Kubankhlebprodukt, claiming US$20 million in debts and penalties.
Sanctions violations: $8.9 billion fine
On 30 May 2014, The Wall Street Journal reported that the United States Department of Justice was negotiating a possible guilty plea with BNP Paribas as well as the size of the resulting fine for violating U.S. regulations and evading US sanctions. The Justice Department sought a fine of more than US $10 billion, which was expected to be reduced to $8 or $9 billion in negotiations. BNP Paribas was said to have laundered up to US$100 billion from the sanctioned countries of Sudan, Iran, and Cuba.On 1 July 2014, BNP Paribas pled guilty in a New York state court to falsifying business records as well as conspiracy in connection to those falsifications. It was also expected to plead guilty in federal court to violating laws against money-laundering. It agreed to pay $8.9 billion, the largest fine ever for violating U.S. sanctions, and substantially more than the previous record of $1.9 billion. BNP Paribas was also barred for one year under the plea agreement from certain US dollar-dominated transactions. The fine exceeded the bank's $6.4 billion 2013 annual income and the $1.1 billion it previously had allocated for the anticipated fine.
The bank's failure to cooperate with the multi-year investigation was given as a significant factor in the size of the fine. Additionally, BNP Paribas continued to process sanctioned transactions after the investigation began. About 30 employees left the bank as a result of the investigation. According to the FBI's New York Field Office and Chief Richard Weber of the Internal Revenue Service-Criminal Investigation "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."
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 first leaked, rose 4% on the announcement. To comply with the transaction ban, BNP Paribas will use a third party to clear its US transactions. Standard & Poor's said it was reviewing the bank's financial standing in light of the fine and penalties for a possible downgrade.
Russian president Vladimir Putin alleged without providing any supporting evidence that the US government was using the case to punish France for selling Mistral amphibious assault ships to Russia. He said the large fine and the imposition of sanctions on the French bank were the result of US displeasure with France's decision not to stop the sale. Former European Central Bank president Jean-Claude Trichet had previously said that a large fine was neither fair nor proportionate to the violations and could disrupt the global banking system.
152 million risk management affair
The German FAZ, FOCUS, Bloomberg and the French Les Echos newspaper published an article regarding a 152 Million EUR mistrade in which BNP Paribas Arbitrage was allegedly involved. The bank has sold securities for 326,400 EUR to the investor Armin S. but the value of the securities is 163 Million EUR according to the bank.According to the article, the error remained unnoticed for several days. BNP has even reconfirmed the original price. However, a trade-cancellation was only possible until the next day according to prevailing erroneous trade rules.
Michael Lusk published an article regarding this case with the title "Do banks' internal control system work?"
The lawyer of Armin S., Mario Bögelein stated in the article that a bank not recognizing an error of this magnitude should not be protected by law.
The Financial Times published an article in March 2018 about the case with the title "BNP Paribas failed to book trades in Germany for a week". They cite internal documents that show it did not book all trades that happened in structured products in Germany from 2 December 2015 to 9 December 2015. The Financial Times estimates that 8500 trades might have been affected. It also questions if the bank has hedged their positions if the trades have not been booked. Armin S. is cited with the words "I don't think it's fair if on the one hand, BNP wants to rely on statutory safeguard clauses but on the other hand they ignored all control-tasks imposed by the regulators – ECB, BaFin and AMF – for a whole week".
Armin S also filed a claim for 152m EUR in Paris because the relevant jurisdiction is still unknown.
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. In 2002 it became the sponsor of the Paris Masters, an ATP World Tour Masters 1000 tournament. In 2008 it became the sponsor of the BNP Paribas Primrose Bordeaux, an ATP Challenger Tour tournament. The company's sponsorship expanded to the United States in 2009 when it became the title sponsor of the Indian Wells Masters, an ATP World Tour Masters 1000 two-week tournament in California. It also sponsored the BNP Paribas Showdown and BNP Paribas Tennis Classic exhibition tournaments held in New York City and London respectively. The Stanford Classic, since 1992, is instead directly sponsored by the Bank of the West subsidiary.Notable current and former employees
- André Azoulay
- Jacques de Larosière – managing director of the International Monetary Fund ; Governor of the Banque de France
- Lorenz of Habsburg, Archduke of Austria-Este
- Louis Alphonse of Bourbon, Duke of Anjou – considered by royalists as the head of the French Royal House
- Nassim Taleb – practitioner of financial mathematics
- David McWilliams – economist