Singapore: Top four French banks will pass Europe’s upcoming stress tests on minimum core capital, while France’s top lender BNP Paribas would have no problem in meeting the new capital rules under Basel 3, its chief executive said.
The European Banking Authority wants European banks to prove they hold more than 5% of core Tier 1 capital to pass an exam imagining a two-year recession, a collapse of property prices and rising unemployment.
“I very much expect that each and all of these four (French) banks will pass the stress tests with no problem,” CEO Baudouin Prot told a news conference in Singapore.
He said overall about 90 banks in Europe will take part in the stress tests.
The top four French banks who will take part are BNP, societe generale, Credit Agricole and French mutual lender BPCE, he said.
BNP had a tier 1 capital ratio of 11.4% and common equity tier 1 ratio of 9.2% at the end of 2010 and has demonstrated its ability to generate cash during the financial crisis, Prot added.
“We will easily meet the new Basel 3 capital requirement,” he said.
Prot said the share of revenue from the Asia-Pacific region will rise in coming years as it grows its corporate and investment banking operations.
The region currently contributes about 12% of BNP’s global corporate and investment banking revenue and the ratio should cross 15% in the next three to five years, he said.
Prot said BNP would not rule out looking at potential acquisitions in wealth management or fund management areas, but but added there were not many targets in Asia.
“On the corporate and investment banking side we have a principle at BNP Paribas that we never acquire anything big,” Prot said. “We don’t really believe in really acquiring large CIB operations because it’s risky.”
He said the bank does not see any impact from Portuguese bond exposure as the unrealised loss was small and would not affect the profit and loss account.
Jean-Pierre Bernard, BNP’s Southeast Asia chief, said the bank expects to have more than 2,000 staff in Singapore over the next few years from 1,700 now.
BNP is in the process of starting full-fledged wholesale banking in Malaysia after it received a commercial banking license last year, he said.