BNP reveals 5 bln eur Greek debt exposure; Q1 rises

BRUSSELS/PARIS Thu May 6, 2010 2:35pm IST

Workers, suspended in harnesses, clean the BNP Paribas bank sign on the headquarters facade near where pigeons roost in Paris April 21, 2009. REUTERS/John Schults/Files

Workers, suspended in harnesses, clean the BNP Paribas bank sign on the headquarters facade near where pigeons roost in Paris April 21, 2009.

Credit: Reuters/John Schults/Files

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BRUSSELS/PARIS (Reuters) - BNP Paribas revealed a 5 billion euro ($6.7 billion) exposure to Greece, the largest among major French banks, as worries over contagion from the debt crisis keep lenders under pressure.

BNP on Thursday also posted first-quarter net profit that beat analyst forecasts, thanks to improved market conditions and the integration of Fortis, and said the economic recovery had begun.

Speaking on BFM radio BNP Chief executive Baudouin Prot tried to calm fears that the Greek economic crisis could spread.

"All the scenarios for the contagion of the Greek crisis to Spain and Portugal are unfounded," he said.

But he said BNP had also decided not to reveal its exposure to euro zone countries aside from Greece.

"We have decided at BNP Paribas that we will not give any number on countries in the euro zone besides Greece," he told Radio Classique.

The bank pegged its Greek sovereign debt exposure at 5 billion euros, a day after smaller rival Societe Generale said its exposure was 3 billion euros.

BNP also said Thursday that it had 3 billion euros in corporate commitments in Greece, mainly with international firms and with risks that had "minimal correlation" to Greece's economy.

BNP's other major French rival, Credit Agricole, has said its sovereign Greek exposure is 850 million euros.

French bank Natixis' parent company BPCE said on Thursday its exposure to Greece stood at 2.1 billion euros, including 882 million at Natixis. Sovereign exposure was 1.4 billion.

This puts BNP firmly ahead of both French peers in Greek exposure. However, unlike them, BNP does not have a significant banking subsidiary within Greece, and analysts see the group as relatively less vulnerable to the broader Greek economy.


BNP reported first-quarter net profit of 2.3 billion euros on Thursday, a 47 percent rise year-on-year and higher than the average forecast of 1.6 billion in a Reuters poll of 11 analysts.

BNP shares rose on the news and were up 2.6 percent at 49.28 euros at 0937 GMT, outperforming a 0.9 perecent rise in the STOXX Europe 600 banks index.

BNP beat analyst forecasts on higher revenues and lower provisions, Citigroup analyst Kimon Kalamboussis said in a note, noting that revenues rose 22 percent year-on-year and expenses were up less than 2 percent.

Capital markets revenues were particularly strong, Citi said, while the equity and advisory unit recorded the "best ever" quarterly results driven by strength in derivatives.

BNP's good results were also due to lower loan provisions as financial market conditions improved, helping BNP's corporate and investment banking unit squeeze out more profit.

"The first quarter 2010 has seen signs of the beginning of economic recovery," the group said.

Going forward the cost of risk for 2010 should also continue to fall at its current rate, Prot said on CNBC, further helping the company turn strong profits.

"I would expect at most that level of decrease to continue but I don't expect the level of decrease to accelerate", he said.

Since the second quarter of 2009 the cost of risk at BNP has been steadily improving, said Jaap Meijer of Evolution securities in a note, underpinning the view that BNP is well provisioned.

BNP's acquisition of assets of Benelux bank Fortis, a deal which closed in May last year, also helped. BNP said it had made 254 million euros in related cost savings as of March 31, which it said was in line with previous announcements.

BNP also said its American subsidiary BancWest had returned to profit during the first quarter.

BNP shares have fallen 14.5 percent year to date, giving the group a market capitalisation of 58.2 billion euros. This is worse than the 7.3 percent fall seen by the STOXX Europe 600 banks index in the same period.

(Additional reporting by Matthieu Protard; Editing by James Regan and Hans Peters)

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