BNP Paribas Says It Doesn’t Need Too-Big-to-Fail Capital Buffer

BNP Paribas SA, the world’s biggest bank by assets, shouldn’t be subject to any so-called too-big- to-fail capital surcharge as size isn’t the key indicator for systemic risk, Chief Executive Officer Baudouin Prot said.

“I see absolutely no reason whatsoever that we should be asked for any capital surcharge,” Prot, 59, said today in an interview with Bloomberg Television. “You should ask for a capital surcharge from the banks whose business model, whose track record has been between bad and horrendous. And there have been a number of them, but not for BNP Paribas.”

The bank, based in Paris, today reported a 46 percent increase in third-quarter profit, helped by its consumer-banking networks in France, Belgium and the U.S.

BNP Paribas said today it had “a very limited amount of subprime mortgages” at its U.S. consumer-banking unit. “We have no foreclosure issues” with U.S. mortgages, Prot said.

The Basel Committee on Banking Supervision, which sets capital standards for banks worldwide, agreed in September to increase the minimum common equity requirement to 7 percent of assets, weighted according to their risks, from 2 percent previously. Individual countries may enforce higher capital requirements for their biggest lenders.

BNP Paribas’s Tier 1 ratio, a key indicator of financial strength, will be “clearly” above the 7 percent minimum set by the new Basel rules, Prot told reporters on a conference call. The CEO declined to provide a forecast for the bank’s Tier 1 ratio at the end of 2012.

To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at fabiobv@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net; Edward Evans at eevans3@bloomberg.net

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