BNP Paribas SA, France’s largest bank, said its corporate and investment banking unit had a “very good performance” in January, after the division led the company to a loss in the fourth quarter.
“I really hope that CIB will be profitable again as soon as the first quarter of this year,” Chief Executive Officer Baudouin Prot said in an interview with Bloomberg Television in Paris. BNP Paribas as a whole will be “largely profitable this year whatever the environment is,” he said.
BNP Paribas rose as much as 3.1 per cent in Paris trading.
The bank, which avoided the worst of the US subprime crisis, suffered after the September bankruptcy of Lehman Brothers Holdings Inc. caused “exceptionally violent movements in capital markets,” the bank said last month. The company also had 345 million of losses related to Bernard Madoff’s alleged scam.
The bank had a ¤1.37 billion ($1.72 billion) fourth- quarter loss, compared with a ¤1.01 billion profit in the year-earlier period, Paris-based BNP said in a statement on Thursday. The bank lowered its dividend for 2008 to 1 euro a share from ¤3.35.
BNP Paribas rose 58 cents, or 2.3 per cent, to ¤25.20 by 10.13 am in Paris. The stock declined 17 per cent so far this year, valuing the company at ¤23 billion. That compares with a 34 per cent drop in Societe Generale SA, France’s third-largest lender by market value.
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Loan Provisions Triple
Paris-based Societe Generale reported yesterday a fourth- quarter profit of ¤87 million as earnings from consumer lending in France outweighed losses at the international retail banking and asset management units.
Total provisions for risky loans at BNP Paribas more than tripled to ¤2.55 billion in the quarter, above the ¤1.95 billion estimate of analysts. The French bank last month gave preliminary results, saying it had a fourth-quarter loss of about ¤1.4 billion.
BNP Paribas’s investment bank had a pretax loss of ¤2.07 billion. Profit before tax from asset management was ¤210 million.
The bank said late on Wednesday it will swap the leaders of the two units at the end of March, putting Alain Papiasse, who currently runs asset management, in charge of corporate and investment banking. Jacques d’Estais, who heads the investment bank, will lead the asset management and services division.
Papiasse, D‘Estais
“In this environment that remains challenging, I’m confident that BNP Paribas will be able again to have a good performance and certainly be profitable,” Prot said in the interview. “I do believe that the French market will be the most resilient in Europe revenue-wise and risk-wise.”
Earnings at the French retail network fell 2.5 per cent to ¤314 million. Retail banking in emerging markets had a pretax loss of ¤40 million, compared with a ¤97 million pretax profit a year earlier. The unit booked ¤272 million of provisions related to the “economic deterioration” in Ukraine. BNP Paribas stopped making new loans in Ukraine and will close 100 branches in the country.
Earnings before tax at Bancwest, the US consumer-banking unit, rose to ¤17 million from ¤15 million a year earlier. Pretax earnings at the Italian retail network BNL, acquired in 2006, fell 14 per cent to ¤100 million. BNP Paribas plans to open 50 new branches in Italy.
‘Open’ on Fortis
BNP Paribas’s Tier 1 capital ratio, a key indicator of financial health, increased to 7.8 per cent at the end of December from 7.6 per cent at the end of September.
Financial institutions worldwide have amassed $1.1 trillion of credit losses and writedowns and raised $991 billion of capital since the US subprime mortgage market collapsed, data compiled by Bloomberg show. The US, Britain, France and Germany are among nations that injected billions into banks to prevent a wider financial calamity following the collapse of Lehman.
BNP Paribas planned to capitalise on its strength relative to peers by taking control of Fortis in Belgium and Luxembourg in an agreement reached with the Belgian government in October. The plan was dealt a setback in December when a Brussels court blocked the transaction. A revised deal was rejected by Fortis shareholders last week.
BNP Paribas is “open” until the end of February to a possible agreement, Prot said in the television interview. “If the Fortis deal is finally going to happen that will be good because we will certainly see a strong strategic fit. If it’s not happening, BNP Paribas will do without it,” he said.
Giving Up Bonuses
The French state pumped ¤10.5 billion into the country’s six largest consumer banks in December, including BNP Paribas, by purchasing subordinated debt securities. In a second round of funding this year, the government has offered to inject the same amount, either through buying preferred shares or debt.
Chairman Michel Pebereau, 67, and Prot, 57, were the first among top managers at France’s largest banks to give up bonuses for 2008, clearing the way for state assistance.
BNP Paribas will hold an extraordinary shareholders meeting to vote on a proposal to issue ¤5.1 billion of preferred shares to the government, the bank has said. As part of the plan, BNP Paribas will convert into preferred shares ¤2.55 billion of funds it obtained from the state last year by selling subordinated debt.