BNP Paribas SA will no longer help arrange bond deals if the issuer intends to use the proceeds to finance new fossil-fuel exploration and production.
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Bloomberg News
Ronan Martin
Published Jun 07, 2023 • Last updated 1day ago • 4 minute read
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(Bloomberg) — BNP Paribas SA will no longer help arrange bond deals if the issuer intends to use the proceeds to finance new fossil-fuel exploration and production.
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BNP Paribas Exits Bond Arranging for New Oil, Gas Ventures Back to video
The development means bond syndications and debt capital markets deals associated with projects for producing more oil and gas are now off-limits for the largest French bank, according to a person familiar with the guidelines who asked not to be identified because they’re not authorized to discuss the matter in public.
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The decision adds detail to an announcement made last month by BNP, when the Paris-based bank laid out plans to expand restrictions around fossil-fuel financing, including the phaseout of its support for non-diversified oil exploration and production firms. BNP was criticized at the time by nonprofit ShareAction, which said the measures didn’t go far enough.
BNP remains the subject of a lawsuit by nonprofits, who say the bank isn’t living up to its environmental obligations. At the same time, BNP has overtaken its peers this year to become the biggest provider of bonds and loans for green projects, Bloomberg data show. And unlike a number of other major banks offering green finance such as JPMorgan Chase & Co., BNP isn’t among the top-10 underwriters of oil and gas deals. For that reason, its ratio of green to fossil financing is the highest among its biggest peers, according to BloombergNEF.
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In an emailed comment to Bloomberg, BNP said the bank has “a core ambition to serve as a leading player in the movement towards a more sustainable economy” and has therefore “initiated a major pivot towards financing low-carbon technologies and activities,” while at the same time “progressively re-directing financing from carbon-intensive industries.”
The bank also said it still intends to “provide strong support — including capital raising and lending — to our clients with an ambitious energy transition agenda.”
And BNP will still look at syndicating bonds for oil and gas companies that are reducing or not expanding their fossil-fuel business, the person familiar said.
Financing Change
An analysis by BloombergNEF suggests the finance industry overall remains a long way from achieving the balance that’s needed to rein in global warming. The ratio of financing for clean-energy relative to fossil fuels must hit 4 to 1 by the end of the decade to live up to the Paris climate agreement, according to BNEF.
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At the end of 2021, the ratio was 0.8 to 1, BNEF said in February. For BNP, the ratio was 1.7. Its decision to exclude new fossil fuels from its underwriting business “is indeed rare among peers,” said Trina White, an analyst at BNEF in New York.
BNP’s decision is “an interesting case study in engagement, as it doesn’t require the voting capability that is granted by owning equity in a firm,” said Ryan Loughead, a BNEF analyst in London. “BNP are using the implicit threat of denying a high-emitting firm credit unless it changes its behavior. How effective this will be remains to be seen, but it has the potential to become another string to the bow of financials hoping to facilitate the transition without simply enacting divestment policies.”
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Banks hardly ever apply the same fossil-fuel financing restrictions to their capital markets business as they do to their lending operations. That may soon change, however, as the industry faces new guidelines. The Partnership for Carbon Accounting Financials (PCAF), which is made up of industry representatives, is currently piecing together standards intended to dramatically limit the so-called facilitated emissions of the global banking sector.
A Milestone
Any such agreement would mark a milestone in climate finance. Assigning responsibility for facilitated emissions — which refers to emissions enabled through debt and equity underwriting — has the potential to significantly reduce oil and gas companies’ access to the cash they need to grow, adding a powerful lever to efforts to rein in global warming.
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Earlier this year, BNP said it was planning to scale back its funding of oil extraction and production by more than 80% through the end of the decade. It also promised to cut its financing of gas production by over 30%.
Meanwhile, there’s growing pressure from investors for banks to reduce exposure to fossil fuels. The Institutional Investors Group on Climate Change, whose members oversee $70 trillion of assets, has formulated emission-reduction standards that encompass debt underwriting amid inconsistent implementation of net zero pledges.
And some institutional investors have already stated their intention to offload banks that don’t cut emissions fast enough, including ABP, Europe’s biggest pension fund.
BNP is still waiting to see how its fossil-fuel financing restrictions will affect the legal challenges it faces from climate activists. In February, organizations including Oxfam joined forces to sue the bank in a Paris court. They alleged that BNP was failing to address its so-called duty of vigilance, a French legal obligation on companies to prevent negative effects from their businesses, including on the environment.
—With assistance from Frances Schwartzkopff and Greg Ritchie.
(Adds BNEF comment in ninth and 10th paragraphs, followed by chart.)
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FAQs
What is the structure of BNP Paribas? ›
The General Management of BNP Paribas is composed of a Chief Executive Officer (CEO) plus two Chief Operating Officer (COO) and two Deputy Chief Operating Officers. The Executive Committee brings together the General Management as well as 14 other members - Heads of core businesses and central functions.
Who owns BNP? ›Share ownership
(1) Société Fédérale de Participation et d'Investissement : a public interest limited company ("société anonyme") acting on behalf of the Belgian government.
In 2022, total revenues of €50.4 billion represent an increase of 9% compared to 2021, BNP Paribas remains at the top of the French banks' ranking in terms of activity.
What are the operating divisions of BNP Paribas? ›BNP Paribas organizes its businesses into three main operating divisions: Corporate & Institutional Banking (CIB), Commercial, Personal Banking & Services (CPBS) and Investment & Protection Services (IPS).
Does BNP Paribas pay well? ›The highest-paying job at BNP Paribas is a Director with a salary of ₹92.8 Lakhs per year. The top 10% of employees earn more than ₹22 lakhs per year. The top 1% earn more than a whopping ₹51 lakhs per year.
What are the 4 core values of BNP Paribas? ›- Responsiveness. Identify and assess new situations, risks and opportunities quickly and decisively. ...
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BNP Paribas is the top bank in the European Union and a major international banking establishment. It has close to 184,000 employees in 64 countries, including more than 145,000 in Europe.
What happened to BNP Paribas? ›BNP Paribas Agrees to Plead Guilty and to Pay $8.9 Billion for Illegally Processing Financial Transactions for Countries Subject to U.S. Economic Sanctions.
Is BNP Paribas a big bank? ›BNP Paribas (BNPQY)
BNP Paribas is a major international bank headquartered in Paris, France.
Who are BNP Paribas and its competitors? ›
BNP Paribas's competitors include Societe Generale, Bank of America, Scotiabank, La Banque Postale. BNP Paribas ranks 1st among 267 competitors. In 2020, the company recorded annual revenues of $41.4 B and a net loss of $-990.6 M.
Is BNP Paribas a blue chip company? ›Europe's Blue-Chip Index Inches Toward Highest Since 2007
ASML Holding NV, LVMH and BNP Paribas SA were among the biggest underperfomers today. The gauge got a lift last week as luxury stocks rallied amid upbeat sales reports from Hermes International and LVMH on a boost from China's reopening.
Tier 1 – J.P. Morgan, Goldman Sachs, Citigroup, Bank of America, Morgan Stanley. Tier 2 – Deutsche Bank, Barclays, Credit Suisse, UBS. Tier 3 – HSBC, BNP Paribas, Société Générale.
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How much does a vice president at BNP Paribas make? ›The estimated total pay for a Vice President at BNP Paribas is $363,676 per year. This number represents the median, which is the midpoint of the ranges from our proprietary Total Pay Estimate model and based on salaries collected from our users. The estimated base pay is $186,088 per year.
What is BNP Paribas debt to equity ratio? ›| BNP Paribas SA Debt/Equity Ratio Historical Data | ||
|---|---|---|
| Date | Long Term Debt | Debt to Equity Ratio |
| 2022-06-30 | $2,948.34B | 22.99 |
| 2022-03-31 | $3,071.69B | 22.14 |
| 2021-09-30 | $3,071.70B | 21.57 |
BNP Paribas Group in Luxembourg offers you a wide range of opportunities with an employer who will invest in your development and your professional career. You will be working with colleagues who embody our slogan – “the bank and insurance for a changing world”.
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The bank for a changing world.
Is BNP Paribas a bulge bracket? ›Examples of tier three would be UBS, BNP Paribas, and SocGen. Being a bulge bracket bank does not necessarily mean it is rock solid. Bear Stearns and Lehman Brothers were once bulge bracket banks, which famously went under during the 2008-09 financial crisis.
Is BNP a middle market? ›BNP Paribas Corporate and Institutional Banking is a French middle market financial services firm offering investment banking, corporate banking, and market services solutions.
Does BNP still own Bank of the West? ›Bank of Montreal agreed in December 2021 to buy BNP Paribas' U.S. unit, Bank of the West, for $16.3 billion in its biggest deal ever, allowing the Canadian lender to double its footprint in the world's biggest economy, while giving BNP a huge step up in financial firepower for deals.
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Who is the head of risk at BNP Paribas? ›Murielle BAIGES | BNP Paribas Real Estate.
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The list of best banks of 2022. DBS was named the World's Best Bank of 2022. It is a Singapore multinational bank founded in 1968. In 2021, it expanded its presence in China and Taiwan, and now it operates in 19 countries.
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Asset-heavy, diversified and regulated banks like JPMorgan Chase, Wells Fargo, PNC Bank and U.S. Bank are among the safest banks in the U.S. and should be considered if you are weighing your options.
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Is BNP Paribas the largest bank in Europe? ›HSBC Holdings PLC narrowly retained its title as Europe's largest bank by assets, S&P Global Market Intelligence data shows. The UK-headquartered, Asia-focused bank had €2.681 trillion of assets at the end of 2022, just surpassing French lender BNP Paribas SA's total of €2.666 trillion.
Who is BNP Paribas regulated by? ›BNP Paribas is authorised and supervised by the European Central Bank (ECB), the ACPR (Autorité de Contrôle Prudentiel et de Résolution) and the AMF (Autorité des Marchés Financiers).
Is BNP Paribas a broker? ›The three deals transformed the business. They made BNP Paribas not only the largest European prime broker, but one that can challenge the US banks on their home turf. Since that first acquisition in 2008, buying established businesses off-the-shelf has proven to be the BNPP prime brokerage team's route to the top.
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BNP Paribas has an overall rating of 3.8 out of 5, based on over 13,265 reviews left anonymously by employees. 77% of employees would recommend working at BNP Paribas to a friend and 63% have a positive outlook for the business. This rating has been stable over the past 12 months.
Where is BNP headquarters in the US? ›BNP Paribas USA is headquartered in New York, NY. In the heart of vibrant Times Square and New York City's famed theater district, our building at 787 Seventh Avenue likewise radiates positive energy, from our trading floors to our collaborative working spaces.
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Are there any French banks in the US? ›BNP Paribas USA: A Premier Global Banking Partner in the US.
Who owns the BNP Paribas? ›Share ownership
(1) Société Fédérale de Participation et d'Investissement : a public interest limited company ("société anonyme") acting on behalf of the Belgian government.
Three level of rounds, then one HR. it took about a week to complete. After final round no review from them, atleast inform the candidate if they are not getting selected.
What country owns BNP Paribas? ›BNP Paribas, French banking, financial services, and insurance company created through the 1999 merger of Banque Nationale de Paris (BNP) and Paribas. Its headquarters are in Paris. The company traces its history to a number of French banks.
What is the company profile of BNP Paribas? ›As a first-tier international banking group, BNP Paribas possesses leading platforms and businesses in Europe, a deep footprint in the Americas, and a solid, fast-growing set-up in the Asia-Pacific region. In Europe, BNP Paribas has four domestic markets: Belgium, France, Italy and Luxembourg.
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What tier is BNP Paribas? ›
Examples of tier three would be UBS, BNP Paribas, and SocGen. Being a bulge bracket bank does not necessarily mean it is rock solid. Bear Stearns and Lehman Brothers were once bulge bracket banks, which famously went under during the 2008-09 financial crisis.
Is BNP Paribas affiliated with Bank of America? ›BNP Paribas and Bank of America have signed an agreement whereby the accounts of certain non-US wealth management clients currently managed by Bank of America's Global Wealth & Investment Management division will be transferred to BNP Paribas' US-based wealth management affiliate, BNP Paribas Investment Services.
Which bank is better HSBC or BNP Paribas? ›HSBC scored higher in 3 areas: Culture & Values, Compensation & Benefits and Career Opportunities. BNP Paribas scored higher in 4 areas: Work-life balance, CEO Approval, Recommend to a friend and Positive Business Outlook. Both tied in 3 areas: Overall Rating, Diversity & Inclusion and Senior Management.
Is BNP Paribas competitive? ›BNP Paribas's competitors include Societe Generale, Bank of America, Scotiabank, La Banque Postale. BNP Paribas ranks 1st among 267 active competitors. In 2020, the company recorded annual revenues of $41.4 B and a net loss of $-990.6 M.
Where is BNP headquarters? ›BNP Paribas is headquartered in Paris, France with a global network of locations in 64 countries, including the United States.
What is the minimum GPA for BNP Paribas? ›Possess GPA of 3.3 out of 4.0 or above (or equivalent) in any discipline.