Image via WikipediaBNP Paribas S.A. is the largest global banking group in the world, headquartered in Paris with its second global headquarters in London.[2] In October 2010 BNP Paribas was ranked by Bloomberg and Forbes as the largest bank and largest company in the world by assets with over $3.1 trillion.[3][4] It was formed through the merger of Banque Nationale de Paris (BNP) and Paribas in 2000. In April 2009, BNP Paribas purchased a 75 percent stake in Fortis Bank, the Belgian banking business making BNP the eurozone's largest bank by deposits held.[5]
BNP Paribas escaped the 2007–09 credit crisis relatively unscathed reporting a €3bn net profit for the year of 2008, and €5.8 for 2009, both years boosted by profits from trading in its BNPPCIB (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 AA by S&P, Aa2 by Moody's and AA- by Fitch.[7]
The firm is a universal bank split into three strategic business units: Retail Banking, Corporate & 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]
Contents [hide]
1 History
2 Business units
2.1 Retail banking
2.1.1 Domestic markets
2.1.2 United States
2.1.3 Emerging markets
2.2 Corporate and investment banking
2.3 Investment solutions
3 Events in 2005
3.1 Major shareholders
3.2 Communication
3.3 Main subsidiaries
3.3.1 Retail banking
3.3.2 Other subsidiaries
4 Notable current and former employees
4.1 Business
4.2 Politics and public service
4.3 Other
5 Controversy
6 See also
7 References
8 External links
[edit]History
In the early 1820s Louis-Raphaël Bischoffsheim founded in his own name a private banking establishment in Amsterdam, while his brother Jonathan Raphaël created a branch in Antwerp in 1827 before settling in Brussels in 1836. Having married the daughter of Frankfurt banker Hayum-Salomon Goldschmidt, Louis-Raphaël Bischoffsheim established the Bischoffsheim-Goldschmidt bank in Paris in 1846, then in London in 1860. In 1863 he merged these banks with the Banque de Crédit et de Dépôt des Pays-Bas, which he had founded in Amsterdam: the Bichoffsheim family thereby established a powerful multinational banking conglomerate.[8][9]
Additionally in 1869, a group of bankers and investors including Adrien Delahante, Edmond Joubert and Henri Cernuschi founded the Banque de Paris, with its headquarters near the Opera at 3 rue d'Antin, Paris.
After the end of World War II, 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 redefined the regulatory framework governing the industry and decreed the nationalization of the Banque de France and the four leading French retail banks: BNCI, CNEP, Crédit Lyonnais and Société Générale. It went into effect on 1 January 1946.
Shares in these companies were transferred to the French State, which assumed complete ownership of the financial institutions. The boards of directors were dissolved and twelve new directors were appointed at each bank. BNCI and CNEP were merged in 1966 to form BNP.
BNP was re-privatised in 1993.
Originally the Compagnie Financière de Paris et des Pays-Bas (Finance Corporation of Paris and the Netherlands), the Compagnie Financière de Paribas became simply Paribas in 1998 after acquiring the Compagnie Bancaire. Claude de Kemoularia was an important executive in the bank in the 1960s and 1970s.
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.[10][11]
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 the 12 December[12][13]
On 14 December 2008, BNP announced it could lose €350 million as a victim of the Madoff fraud.[14]
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%. 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.[15]
[edit]Business units
[edit]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.
[edit]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.[16] 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 billon (15.2% of total group's), income of €1.5 bilion (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.
[edit]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).[6] BancWest lost €223 millon in 2009 largely due to its exposure in the subprime mortgage crisis in California, Arizona, and Nevada.
[edit]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.
The EM group includes:
Ukraine: UkrSibbank is Ukraine's 3rd largest lender.
Turkey: Türk Ekonomi Bankası, Fortis Turkey
Morocco: BMCI and
Libya: Sahara Bank
Poland: BNP Paribas Fortis Poland
Egypt: BNP Paribas Egypt
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).[17]
[edit]Corporate and investment banking
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.[18][19]
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]
[edit]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.[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 518 bllion of assets under management.[6]
[edit]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.
[edit]Major shareholders
France (17%)[20]
Belgium (11.6%)
AXA insurance company
Customers
Employees
General Mediterranean Holdings
[edit]Communication
BNP Paribas is one of the most important sponsors of the Tennis French Open in Roland Garros stadium since 1971
[edit]Main subsidiaries
[edit]Retail banking
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 Sénégal (Senegal)
[edit]Other subsidiaries
BNPPCIB – BNP Paribas Corporate and Investment Banking
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[21] with Arval,[22] car leasing and Artegy
BNP Paribas Real Estate
BNP Paribas Securities Services
BNP Paribas Wealth Management with Isinger de Beaufort, BNP Paribas Private Banking
Cetelem
LaSer UK with Cofinoga
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 (Geojit BNP Paribas Financial Services Ltd.)
L'Atelier
Creation Consumer Finance[23]
Lafayette Services[23]
BNP Paribas Personal Investors Luxembourg
SAIB-BNP Paribas Asset Management
[edit]Notable current and former employees
[edit]Business
Boris Adlam – British financier
Nassim Taleb – practitioner of financial mathematics
[edit]Politics and public service
Louis Alphonse of Bourbon, Duke of Anjou – considered by royalists as the head of the French Royal House.
Jacques de Larosière – managing director of the International Monetary Fund (1978–87); Governor of the Banque de France (1987–93)
Lorenz of Habsburg, Archduke of Austria-Este
[edit]Other
David McWilliams – economist
Georges Chodron de Courcel – Managing Director, from the family of Mrs. Bernadette Chirac
Edmond Turquieh – founder of Sapiance Capital Ltd
[edit]Controversy
In 2010 the French government's Autorité de la concurrence fined BNP and 10 other banks 384 million Euros 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.[24] On 19 January 2011 BNP sued Russian grain traider OOO Rosinteragroservis and its subsidiary OAO Kubankhlebprodukt, claiming $20 million in debts and penalties.[25]
BNP Paribas is, according to Profundo, amongst banks, the biggest investor in the nuclear sector, with more than € 13,5 billion in nuclear investments. On 23rd October 2011 Greenpeace organised a protest against BNP Paribas in 24 French cities. [26] Citigroup and Barclays are shared second and third with over € 11,4 billion.[27]
