Thursday, Sep 22, 2011

-- BNP Paribas says it routinely meets international investors

-- Stays mum on reports of contingency plan to raise capital

-- Reportedly talking to Middle East investors to raise up to EUR2B

(Adds detail and background from paragraph four.) 


 
   By Digby Larner 
   Of DOW JONES NEWSWIRES

PARIS (Dow Jones)--French bank BNP Paribas SA (BNP.FR) said Thursday that it routinely meets with foreign investors, while declining to comment directly on reports that it plans to tour the Middle East in coming days in a bid to raise up to EUR2 billion in fresh capital.

"BNP Paribas naturally conducts roadshows every year to present the bank and promote its shares with investors around the world," a spokesman said.

The Financial Times reported that Chief Executive Baudouin Prot is preparing a contingency plan with potential investors to inject cash into the bank in case the European debt crisis worsens.

The bank on Thursday reiterated recent comments that BNP Paribas aims to be in line with new Basel III rules by January 2013 with a common equity Tier 1 ratio of 9%: "That's to say, six years before the final implementation date of 2019," the spokesman said.

French bank shares have been under enormous pressure since the beginning of the summer on concerns over their exposure to Europe's deepening sovereign debt crisis. BNP Paribas, France's largest bank by market value, is heavily invested in Italian bonds worth around EUR21 billion.

The FT said BNP Paribas executives have urged regulators to carry out an emergency stress test in an effort to pinpoint exactly where the weaknesses are in the French banking system. That could lead to some kind of orchestrated injection of state funds, its said, citing bankers.

It suggested that the talks in Qatar and Abu Dhabi are intended to provide the French bank with an alternative to a forced recapitalization if it were demanded.

BNP Paribas has taken repeated steps to reassure investors that its finances are solid. A week ago, it announced plans to slash its enormous balance sheet and boost its capital ratios.

CEO Prot said the bank would refocus its business on strategic activities, slashing its dollar liquidity needs and reducing assets in order to comply with Basel III capital rules by the start of 2013.

Prot said BNP Paribas had reduced the dollar liquidity needs of BNP Paribas's corporate and investment bank by $22 billion in the first half of the year and is targeting a further $60 billion cut by the end of 2012.

The bank last week escaped a downgrade by Moody's Investors Service, which cut ratings on its two main competitors, Credit Agricole SA (ACA.FR) and Societe Generale SA (GLE.FR).

Prot conceded at the time that BNP Paribas hadn't been able to calm investor worries. "We presently pay a high price for being a euro-zone bank," he said.

By refocusing its business, BNP Paribas aims to reduce risk-weighted assets--a regulatory measure reflecting the risk of a bank's loans and investments--by around EUR70 billion, or about 10% by the beginning of 2013.

The bank has taken a 21% hit on its Greek bonds with maturities between 2011 and 2020 so far and has said that even if losses were to rise to 55% its impairments would be a pretax EUR1.7 billion.

BNP Paribas shares continued to slide Thursday. At 0745 GMT, they were down 3.7% at EUR23.55. It has lost over half its market value since July 1.

Other French banks were also lower. SocGen shares were down 5.3% at EUR16.03, around 60% lower than at the beginning of July, while Credit Agricole was down 2.3% at EUR4.56, shedding about 58% since July 1.

The Stoxx Europe 600 banks index was down 3%.

-By Digby Larner, Dow Jones Newswires; +33 1 4017 1748; digby.larner@dowjones.com

(END) Dow Jones Newswires

22-09-11 0802GMT