BNP Says 2013 Capital Goal Includes Italian Debt Mark-to-Market

BNP Paribas (BNP) SA, France’s largest bank, said its capital level goal for the start of 2013 includes a “marked to market” impact on its Italian sovereign debt holdings.

BNP Paribas’s goal to reach 9 percent in common equity Tier 1 under Basel III as of Jan. 1, 2013, includes a 30 basis point “impact” on the capital level from marking to market the 20.8 billion euros ($28.1 billion) of Italian sovereign debt, according to a presentation today on its website. The bank calculated the mark-to-market as of Sept. 20 without giving any provision level for its Italian government-debt holdings. Italy is “on track to fiscal balance by 2013,” according to the presentation.

BNP Paribas announced on Sept. 14 it was taking steps to cut its balance sheet by about 10 percent to help boost the capital ratio by about 1 percentage point under Basel III rules. Chief Executive Officer Baudouin Prot said in a Sept. 22 radio interview that the French bank plans “no provision” on its Italian sovereign-debt holdings.

“Nothing allows today to question Italy’s debt solvency,” Prot said Sept. 22.

Separately, BNP Paribas has 15 billion euros of net excess U.S. dollars deposited at the Federal Reserve, the bank said in today’s presentation. BNP Paribas repeated it got 36 billion euros of short-term funding from U.S. money-market funds as of Sept. 9, most of its short-term funding needs in dollars, according to its website.

BNP Paribas has said it isn’t borrowing U.S. dollars from the European Central Bank.

BNP Paribas’s holdings in the sovereign debt of Greece, Ireland and Portugal are “manageable,” the bank has said. In Greece, the company would have a 1.7 billion-euro pretax writedown on its sovereign holdings if it took a 55 percent mark-to-market impairment, it said Sept. 14.

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

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