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Rating Action:

Moody's places BNPP's ratings under review for possible downgrade

22 Oct 2009

London, 22 October 2009 -- Moody's today placed under review for possible downgrade the B BFSR, Aa1 senior debt ratings, Aa2 subordinated debt ratings and Aa3 deeply subordinated debt ratings of BNP Paribas (BNPP). The bank's Prime-1 short-term ratings were affirmed. Related actions on BNPP's rated subsidiaries are discussed at the end of the press release.

Moody's considers BNPP to be one of the stronger global financial institutions and recognises that the bank has navigated its way to date through the financial crisis without reporting the size of losses and breakdown in risk management evidenced by many of the lower rated institutions. Moreover, the granularity of the bank's retail loan books and their geographic spread mainly across countries which are not expected to experience the deepest recessions, provide resilience to the bank's ratings and mean that any downgrade would be unlikely to exceed one notch. However, in Moody's opinion BNPP's credit profile has certain weaknesses, which make the bank less well positioned as a B BFSR-rated financial institution. These areas, detailed below, will form the basis of the review:

- Moody's will assess the risks for management associated with the ongoing integration of Fortis Bank SA/NV (FB) (rated C- negative outlook/A1 stable). The structure of the acquisition has meant that BNPP has not assumed some of the riskiest structured assets held by FB and this prevented a negative rating action at the time of the acquisition, however there are still significant financial and management challenges in turning around the FB businesses, which may take some time to make a meaningful contribution to group profits and hence depress the group's risk-adjusted profitability.

- In particular, Moody's will examine BNPP's ability to manage down single large exposures that have increased as a result of the acquisition of FB, due to the duplication of some of BNPP's existing counterparty and large corporate exposures. Although the exposures are generally to higher-rated entities, Moody's views an increase in single large exposures as a negative rating factor.

- Moody's will also consider the above in relation to the bank's long-term capitalisation strategy. Moody's notes positively that BNPP has boosted its Tier 1 ratio from 7.81% at the end of 2008 to 9.3% at the end of June 2009, and has improved the quality of capital with the replacement of government capital with equity capital through the rights issue. However, bearing in mind the further potential pressure on capital ratios from increases in loan-loss provisions, Moody's considers the bank's capital ratios as still rather weak for a B BFSR-rated institution.

- This review will also encompass the recalibration of BNPP's BFSR in line with the expectation that, as with many other banks globally, BNPP will experience increasing deterioration in asset quality over the coming quarters, which is likely to lead to greater credit-related write-downs than previously anticipated in the ratings, and exerting adverse pressure on profitability and capitalisation. Further information is available in our Special Comment published today entitled "Moody's Approach to Estimating French Banks' Credit Losses" as well as similar Special Comments published on other countries previously.

SENIOR DEBT RATINGS

The long-term debt and deposit ratings of BNPP have included 2 notches of systemic support, given the bank's important role in the French economy, lifting the B BFSR (which maps to a baseline credit assessment of Aa3) to the Aa1 senior debt and deposit ratings. No change is envisaged to the amount of support to be incorporated into the ratings as part of this review.

RATINGS OF SUBSIDIARIES

The A1 senior debt and deposit ratings with stable outlook of Fortis Bank S.A./ N.V. and BGL BNP Paribas S.A., as well as the A3 debt ratings with negative outlook of Exane S.A. and Exane Derivates SNC were affirmed. There is also no change to the ratings of Banca Nazionale Del Lavoro S.P.A. or UkrSibbank.

A separate press release will follow on LaSer Cofinoga.

The Aa3 long-term debt and deposit ratings of BancWest Corporation and subsidiaries were placed on review for possible downgrade, based on the potential for downgrade of BNP Paribas' BFSR, which would reduce the support incorporated in the debt and deposit ratings of the US subsidiaries. This action has no effect on the operating banks' BFSRs (C+ for Bank of the West and B- for First Hawaiian), their short-term Prime-1 ratings, or the FDIC guaranteed debt issued by Bank of the West.

LAST RATING ACTION

The last rating action on BNPP was on January 16, 2009 when the outlook on the B BFSR and Aa1 senior debt and deposit ratings was changed from stable to negative.

The principal methodology used in rating this issuer was Moody's "Bank Financial Strength Ratings: Global Methodology", published in February 2007 and "Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology" published in March 2007, available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website.

The ratings of bank subordinated capital securities are assigned in line with Moody's existing methodology entitled "Guidelines for Rating Bank Junior Securities", dated April 2007. Moody's notes that on June 16, 2009, it released a Request for Comment, in which the rating agency has requested market feedback on potential changes to its rating methodology for bank subordinated capital. If the revised methodology is implemented as proposed, the rating on bank subordinated capital securities may be negatively affected. Please refer to Moody's Request for Comment, titled "Moody's Proposed Changes to Bank Subordinated Capital Ratings," for further details regarding the implications of the proposed methodology changes on Moody's ratings.

Based in Paris, BNP Paribas had total assets amounting to €2,289 billion and a Tier 1 ratio of 9.3% at end-June 2009.

On Review for Possible Downgrade:

..Issuer: BNL International Investments

....Multiple Seniority Medium-Term Note Program, Placed on Review for Possible Downgrade, currently Aa1

..Issuer: BNP PARIBAS Capital Trust III

....Preferred Stock Preferred Stock, Placed on Review for Possible Downgrade, currently Aa3

..Issuer: BNP Paribas

....Bank Financial Strength Rating, Placed on Review for Possible Downgrade, currently B

....Issuer Rating, Placed on Review for Possible Downgrade, currently Aa1

....Junior Subordinated Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently Aa2

....Multiple Seniority Medium-Term Note Program, Placed on Review for Possible Downgrade, currently a range of Aa2 to Aa1

....Preferred Stock Preferred Stock, Placed on Review for Possible Downgrade, currently Aa3

....Subordinate Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently Aa2

....Senior Unsecured Conv./Exch. Bond/Debenture, Placed on Review for Possible Downgrade, currently Aa1

....Senior Unsecured Medium-Term Note Program, Placed on Review for Possible Downgrade, currently Aa1

....Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently Aa1

....Senior Unsecured Deposit Rating, Placed on Review for Possible Downgrade, currently Aa1

..Issuer: BNP Paribas Arbitrage Issuance B.V.

....Multiple Seniority Medium-Term Note Program, Placed on Review for Possible Downgrade, currently Aa2, Aa1

..Issuer: BNP Paribas Capital Trust I

....Preferred Stock Preferred Stock, Placed on Review for Possible Downgrade, currently Aa3

..Issuer: BNP Paribas Capital Trust IV

....Preferred Stock Preferred Stock, Placed on Review for Possible Downgrade, currently Aa3

..Issuer: BNP Paribas Capital Trust VI

....Preferred Stock Preferred Stock, Placed on Review for Possible Downgrade, currently Aa3

..Issuer: BNP Paribas US Medium-Term Note Program LLC

....Multiple Seniority Medium-Term Note Program, Placed on Review for Possible Downgrade, currently a range of Aa2 to Aa1

....Subordinate Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently Aa2

....Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently Aa1

..Issuer: BNP Paribas US Structured MTN Program LLC

....Multiple Seniority Medium-Term Note Program, Placed on Review for Possible Downgrade, currently Aa2, Aa1

..Issuer: BNP Paribas, New York Branch

....Senior Unsecured Deposit Note/Takedown, Placed on Review for Possible Downgrade, currently Aa1

....Senior Unsecured Deposit Rating, Placed on Review for Possible Downgrade, currently Aa1

..Issuer: BancWest Corporation

....Subordinate Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently A3

..Issuer: Bank of the West

....Issuer Rating, Placed on Review for Possible Downgrade, currently Aa3

....OSO Senior Unsecured OSO Rating, Placed on Review for Possible Downgrade, currently Aa3

....Senior Unsecured Deposit Rating, Placed on Review for Possible Downgrade, currently Aa3

..Issuer: Banque Paribas

....Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently Aa1

..Issuer: Banque Paribas, New York Branch

....Subordinate Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently Aa2

..Issuer: Compagnie Bancaire

....Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently Aa1

..Issuer: First Hawaiian Bank

....Issuer Rating, Placed on Review for Possible Downgrade, currently Aa3

....OSO Senior Unsecured OSO Rating, Placed on Review for Possible Downgrade, currently Aa3

....Senior Unsecured Deposit Rating, Placed on Review for Possible Downgrade, currently Aa3

..Issuer: First Hawaiian Capital I

....Preferred Stock Preferred Stock, Placed on Review for Possible Downgrade, currently A3

..Issuer: Lavoro Bank Overseas N.V.

....Multiple Seniority Medium-Term Note Program, Placed on Review for Possible Downgrade, currently Aa3, Aa2

Outlook Actions:

..Issuer: BNP PARIBAS Capital Trust III

....Outlook, Changed To Rating Under Review From Negative

..Issuer: BNP Paribas

....Outlook, Changed To Rating Under Review From Negative

..Issuer: BNP Paribas Arbitrage Issuance B.V.

....Outlook, Changed To Rating Under Review From Negative

..Issuer: BNP Paribas Canada

....Outlook, Changed To Rating Under Review From Negative

..Issuer: BNP Paribas Capital Trust I

....Outlook, Changed To Rating Under Review From Negative

..Issuer: BNP Paribas Capital Trust IV

....Outlook, Changed To Rating Under Review From Negative

..Issuer: BNP Paribas Capital Trust VI

....Outlook, Changed To Rating Under Review From Negative

..Issuer: BNP Paribas Finance, Inc.

....Outlook, Changed To Rating Under Review From Negative

..Issuer: BNP Paribas US Medium-Term Note Program LLC

....Outlook, Changed To Rating Under Review From Negative

..Issuer: BNP Paribas US Structured MTN Program LLC

....Outlook, Changed To Rating Under Review From Negative

..Issuer: BancWest Corporation

....Outlook, Changed To Rating Under Review From Negative

..Issuer: Bank of the West

....Outlook, Changed To Rating Under Review From Negative

..Issuer: First Hawaiian Bank

....Outlook, Changed To Rating Under Review From Negative

..Issuer: First Hawaiian Capital I

....Outlook, Changed To Rating Under Review From Negative

..Issuer: Lavoro Bank Overseas N.V.

....Outlook, Changed To Rating Under Review From Negative

London
Elisabeth Rudman
VP - Senior Credit Officer
Financial Institutions Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Frankfurt
Carola Schuler
Managing Director
Financial Institutions Group
Moody's Deutschland GmbH
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's places BNPP's ratings under review for possible downgrade
No Related Data.
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