November 5, 2008 – 11:01 am

2008-11-06 Bad Blow Up-Q3:

BNP Paribas reported earnings that sagged 56 percent and would have stunk up the joint a year ago. Now they don’t seem so bad because they were in the black. They reported $1.42B in write-downs, $2.56B in bad loan provisions and raised cash from the government to the tune of $3.25B. We will have to wait until we can get the official 10Q to get level 3 assets.

Here’s the tally thus far:

  1. Write-Downs/Charge-Offs: $3.194B + $$1.42B = $4.61B
  2. Cash Raised: $3.25B
  3. Level III assets: $?
  4. Loan Loss Reserves: $2.56B

We now sum all the distresses to get BNP’s current Misery Index of $10.42B. <>

2008-08-06 Sinking:

BNP Paribas reported that profits sunk by more than a third as markdowns and provisions related to the subprime crisis so far amount to about €2.6B ($4.01B). The bank did not raise capital during the quarter, nor does it plan to in the future. The second quarter 2008 10-Q was not available online, so we will have to wait to see how high the Level 3 waste waters have risen. For now we set them to zero.

Here’s the tally thus far:

  1. Write-Downs/Charge-Offs: $2.5B + $694M = $3.194B
  2. Cash Raised: $0.0
  3. Level III assets: $0
  4. Loan Loss Reserves: $1.31M

We now sum all the distresses to get BNP’s current Misery Index of $3.195B. <>

2008-06-04 Running on Empty:

BNP Paribas is a little thin in their capital ratios according to the word on the Street. It looks like that goose egg in the cash raised column is set to go up.

2008-05-14 We Did Better Than They Did:

You know the bubble has burst when the bank announces a 21% profit decline and $557M in credit-related write-downs during the quarter while touting that it had half the write-downs of its main rivals, Societe Generale and Credit Agricole.

BNP Paribas SA posted a 21% decline in first-quarter net profit as earnings fell in its investment-banking arm. Yet, with €360 million ($557.2 million) in write-downs, France’s largest bank by market value is weathering the credit turmoil far better than some rivals.

Because of BNP’s low exposure to U.S. subprime-mortgage products, the bank’s write-downs are much lower than those of domestic rivals Société Générale SA and Crédit Agricole SA, which each unveiled more than €1 billion in new write-downs this week.

So, adding the Q1 2008 write-downs to the $1.9B for full year 2007 we get $1.9B + $557M = $2.457B or $2.5B in credit-related write-downs so far, and still no cash raised.


BNP Paribas was born out of the takeover struggle between Banque Nationale de Paris, Societe Generale and Banque Paribas. Conceived as it was in fire, the takeover child was destined to beat out Societe Generale and become France’s largest bank by market value. BNP Paribas had by far its best fiscal year in 2006, but every year was a very good year for the new bank. Earnings routinely ranged in the double digits, and headlines spat it out:

BNP Paribas SA, France’s largest bank by market value, said first-quarter profit rose 17 percent after revenue from investment banking increased and acquisitions in the U.S. lifted earnings from consumer lending abroad.

Followed by more of the same.

French bank BNP Paribas SA said second-quarter net profit climbed 31%, thanks to the strong performance of its corporate investment bank and the integration of Italy’s Banca Nazionale del Lavoro SpA.

Credit ratings for the anointed one were by default tripple-A.

Standard&Poor’s Ratings Services has assigned a preliminary ‘AAA’ credit rating to the first issuance under BNP Paribas’ covered bond program of up to €25 billion issued by BNP Paribas Covered Bonds.

And lest the prince take offense, the overall evaluation was enamored.

The ratings on French banking group BNP Paribas reflect its strong and highly diversified business profile; sound financial position characterized by contained risk, satisfactory profitability, adequate capitalization, and high financial flexibility; and the group’s good management and moderate risk appetite.

And even as the hurricane season of banking crashed ashore in mid summer of 2007, BNP kept its charm by reporting a 25 percent increase in first-quarter profit, followed by a 20% rise in net profit for fiscal second quarter 2007. Interestingly, the bank suffered no subprime related write-downs as it claimed that its portfolio was virtually bereft of some U.S. subprime mortgage portfolios. But there was an exception as the bank did in fact manage three mutual funds beleaguered by subprime. When the value of the funds’ assets crashed, the bank froze the funds:

BNP Paribas, the biggest listed bank in France, froze €1.6 billion, or $2.2 billion, worth of funds Thursday, citing U.S. subprime mortgage sector problems.

After subprime disaster sent chills through the market, BNP’s profits again seemed untouched,even as it followed on the heals of Germany’s Bundesbank:

BNP Paribas SA said Thursday third-quarter net profit rose 21 percent BNP Paribas on strong revenue growth at the group’s consumer credit division, retail banking in emerging markets and asset management.

It wasn’t until the third quarter 2007 that the ubiquitous credit crisis finally grazed BNP Paribas.

The subprime credit crisis hit revenues by €186 million (US$272 million) and increased the cost of risk by €115 million (US$168), the French bank said.

And even though the $272M seemed paltry at the time compared to the likes of UBS and Citigroup, the credit crisis, as Bear Stearns and Lehman Brothers discovered, catches up at an exponential pace. For the fiscal fourth quarter, the rate of pursuit is far from exponential, nor is it constant.

BNP Paribas SA, France’s largest bank, reported a 42 percent decline in fourth-quarter profit after writing down the value of securities hurt by worsening credit markets.

BNP Paribas took 589 million euros of writedowns on leveraged loans and debt backed by bond insurers, and set aside 309 million euros linked to U.S. loans and securities. For 2007, the bank’s 1.2 billion-euro costs related to the U.S. subprime crash were dwarfed by the more than $18 billion of markdowns by UBS AG, Europe’s largest bank, and were less than those of French rivals Societe Generale SA and Credit Agricole SA.

So, for fiscal year 2007 BNP Paribas wrote down a mere $1.9B worth of subprime-damaged assets while not finding it necessary to raise any cash.

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