BNP Paribas (BNP) SA, France’s largest bank, aims to boost its common equity tier 1 capital ratio to 9 percent by the start of 2013 as it scales back U.S. dollar corporate- and investment-banking business.
BNP Paribas is taking steps to cut risk-weighted assets by about 70 billion euros ($96 billion) to increase the capital ratio by 1 percentage point by the end of next year under Basel III rules, the Paris-based bank said in a presentation on its website today. As part of the effort, BNP Paribas is cutting its corporate- and investment-banking balance-sheet by $82 billion.
“Since early 2011, the group has taken actions to adapt the business model to the new liquidity, solvency and leverage environment,” the bank said in the presentation. BNP Paribas trimmed assets by $22 billion in the first half, mostly in capital-markets activities, and plans additional cuts in U.S. dollar assets of $60 billion by the end of 2012, by curbing lending as well as through sales and business disposals.
BNP Paribas’s exposure to the sovereign debt of Greece, Ireland and Portugal is “manageable,” the bank said. In Greece, the French bank would have a 1.7 billion-euro pretax additional writedown on its sovereign holdings if it took a 55 percent mark-to-market impairment, it said. Any markdown on the Greek sovereign bonds in third-quarter accounts will depend on the implementation of the rescue package agreed to on July 21, which involved a 21 percent writedown on debt maturing by 2020, it said.
BNP Paribas is also aiming for a 9 billion-euro reduction of mortgage lending at its personal-finance division in Spain, the Netherlands, Switzerland, Norway and Hungary, the bank said. BNP Paribas is seeking to reduce lending at the equipment-solutions unit by 3 billion euros as it scales down activity in the U.K., Switzerland and Hungary and exits some leasing activities such as real estate, yachts and business jets, it said.