Enterprise Risk Management at BNP Paribas
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ICMR HOME | Case Studies Collection
Case Details:
Case Code : ERMT-021
Case Length : 15 Pages
Period : 2003
Pub Date : 2003
Teaching Note :Not Available
Organization : BNP Paribas
Industry : Banking
Countries : Global
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Background Note Contd...
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It was the #3 bank in France from the late 19th century through the 1950s.
Banque National pour le Commerce et l'Industrie (BNCI) started in Alsace, a
region that was part of Germany from the Franco-Prussian War until WWI. BNCI
served as an economic bridge between Germany and France.
By the 1960s, BNCI had overtaken CNEP in size. French leader Charles de Gaulle
believed banking would drive post-WWII reconstruction.
In 1945, CNEP and BNCI were nationalized. In 1966, France's finance minister
merged them and they became BNP.
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BNP started an association with Dresdner Bank of Germany, under which the two
operated joint ventures, primarily in Eastern Europe.
In the early 1990s, the privatized BNP expanded outside France to get around
government controls. Even before privatization, BNP had been involved in
controversial deals such as the bailout of OPEC money repository Banque Arabe
and the extension of credit to Algeria's state oil company Sonatrach.
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These deals seemed to have been influenced by political considerations. In 1997,
BNP won the right to operate in New Zealand, bought Laurentian Bank and Trust of
the Bahamas, took control of its joint venture with Egypt's Banque du Caire, and
opened a subsidiary in Brazil.
BNP bought failed Peregrine Investment's Chinese operations in 1998.
That year the bank also expanded in Peru, opened an office in Algeria, opened a
representative office in Uzbekistan, set up an investment banking subsidiary in
India, and bought Australian stock brokerage operations from Prudential. |
As France's other two large banks (Société Générale and Paribas) made plans to
merge, BNP decided it would absorb both banks as a means to get a bigger chunk
of the to-be-privatized Crédit Lyonnais. But executives at Société Générale (SG),
formed a cartel called "Action Against the BNP Raid." Meanwhile, BNP tried to
boost controlling stakes its holdings in the two banks. (In Europe's
cross-ownership tradition, the target banks also owned part of BNP.) France's
central bank tried unsuccessfully to negotiate a deal (the government supported
the triumvirate merger)...
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