BNP Paribas is a French international banking group operating in over 70 different countries spread over five continents. BNP Paribas is the largest bank in the Eurozone by total assets and second largest by market capitalization.

BNP Paribas is listed on the first market of Euronext Paris, where it is traded as BNP. BNP is included in both the French CAC 40 index and the Euro Stoxx 50.

BNP Paribas S.A.In 2015, the BNP Paribas Group was organized around two business areas:

  • Corporate & Institutional Banking (CIB)
  • Retail Banking & Services

On an average day, 250 billions in fixed income instruments are traded at BNP Paribas America’s fixed income trading floor in Manhattan, New York City.

Background

The roots of BNP Paribas goes back to a national bank founded in 1848. The name was changed to BNP Paribas in the year 2000, as Banque Nationale de Paris (BNP) merged with Paribas.

On the 9th of August 2007, BNP Paribas acknowledged the impact of the sub-prime crisis – the first major financial group to do so. BNP Paribas quickly took steps to protect themselves, and this early reaction – which included the closing of two funds on 9 August – saved it from the harsh losses incured by many other large European banks. Following the 2008 financial crisis, BNP Paribas emerged as one of the worlds five largest banks.

Short facts about BNP Paribas

Name BNP Paribas
Company type Société Anonyme
Traded as Euronext: BNP
Index inclusion CAC 40
Industry Financial services
Area served Worldwide
Examples of key products Consumer banking

Corporate banking

Investment banking

Asset management

Wealth management

Credit cards

Mortgage loans

Founded BNP in 1848

Paribas in 1872

BNP Paribas in 2000

Headquartered Boulevard des Italiens, Paris, France

Corporate & Institutional Banking (CIB)

BNP Paribas’ CIB unit is one of the world’s leading global investment banks, especially in the fields project finance, structured finance and derivatives trading.

The CIB unit has 6 key business areas:

Area Info
Fixed income  

  • Structures and sells derivative products to C&Is that wish to hedge their exposure to risks pertaining to credit, interest rates and FX.
  • Trades in derivative products on behalf of clients.
  • Trades in derivative products for its own proprietary account.

 

 

Equity derivatives
  • Helps C&Is manage their risks and investment portfolios using equity derivatives and structured products.
  • Trades in equity derivative products on behalf of clients.
  • Trades in equity derivative products for its own proprietary account.
Commodity derivatives
  • Helps C&Is manage commodity risks through the structuring and sale of commodity futures and OTC commodity swaps.
  • Trades in commodity futures and OTC commodity swaps on behalf of clients.
  • Trades in commodity futures and OTC commodity swaps for its own proprietary account.
Investment banking
  • Carry out traditional investment banking functions, including equity raising operations such as IPOs, convertible bond issues and rights issues.

 

  • Offers advice regarding mergers and acquisitions.
Structured finance
  • Project financing
  • Export financing
  • Syndicated loans
  • Financing for acquisitions
  • Financing for leveraged buyouts
Corporate & Transaction
  • Simplified flow banking services, such as international cash management, trade finance and basic hedging.

Retail banking & Services

Europe is the main focus for BNP Paribas retail banking operations, but this business unit is also present in Turkey, the USA and North Africa.

BNP Paribas is a member of the Global ATM Alliance, which means that its customers can use their ATM cards and check cards at any bank within the alliance without paying ATM surcharges when traveling abroad.

Europe & the Mediterranean Region

BNP Paribas S.A.In Europe, BNP Paribas’ most important markets for retail banking are France, Belgium and Italy. In Belgium, uses the bran BNP Paribas (BNP Paribas Fortis), but in Italy it operates as Banca Nazionale del Lavoro (BNL).

In France, BNP Paribas runs one of the country’s largest retail banking networks, serving over 6 million households and about 60,000 corporations through approximately 2,200 branches and more than 3,200 ATMs.

Other examples of markets where BNP Paribas offers retail banking are Poland, Ukraine, Turkey, USA, and some countries in Northern Africa.

USA

In the United States, BNP Paribas serves around 5 million clients through its American subsidiary BancWest. BancWest runs Bank of the West in 19 states; all located the western part of mainland U.S. In Hawaii, BancWest operates the First Hawaiian Bank which have a 40% market share in deposits in Hawaii. In the United States, BNP Paribas is especially strong in niche markets such as agribusiness, church lending and lending for marine and recreational vehicles.

In 2015, retail banking represented over 70% of BNP Paribas’ total revenue, making it the company’s largest businesses unit in terms of revenue.

BNP Paribas Investment Partners (IP)

BNP Paribas Investment Partners (IP) offers asset management. In 2014, this unit had approximately 395 billion USD in assets under management, an increase of 11% over 2013.

Examples of legal difficulties

Sanctions violations, falsification of businesses records and conspiracy

In the summer of 2014, BNP Paribas pleaded guilty to falsifying businesses records and conspiracy, having violated U.S. sanctions against Iran, Sudan and Cuba. The company agreed to pay an 8.9 billion USD fine. (To put this sum into perspective, the company’s income for the year 2013 was 6.4 billion USD.) The plea agreement also meant that BNP Paribas agreed to being barred from certain US dollar-dominated transaction for a year.

Failing to adhere to control-tasks imposed by the regulators

In 2017, several major newspapers published an article regarding a €152 million mistrade (erroneous trade), where BNP Paribas Arbitrage has sold securities for €326,400 to the investor Armin S. even though the securities were actually valued at €163 million.

According to the article, the error remained undetected for several days, and BNP Paribas even re-confirmed the price. Eventually, it was unveiled that BNP failed to book any of their trades in structured products in German from 2 to 9 December, 2015. Based on internal documents, The Financial Times estimated that approximately 8500 trades might have been carried out without being booked during this period.

Two main concerns voiced as a result of these findings were:

  • Was the bank hedging its positions with unbooked trades?
  • Should banks be able to rely on statutory safeguard clauses concerning mistrades in situations where they themselves ignore to carry out the control-tasks imposed by the regulators (in this case, the ECB, BaFin and AMF)?

Unjustified fees for check processing

In 2010, French authorities fined BNP and ten other banks for colluding to charge unjustified fees on check processing. Extra check processing fees had been added during the transition from paper check transfer to electronic transfer (Exchanges Check-Image).