WSJ:UPDATE: BNP Paribas Cuts Dollar Needs With Energy Business Sale
-- Deal significantly lowers BNP Paribas's dollar financing needs
-- BNP Paribas began reducing its dollar-financed businesses last summer
-- Assets were sold at a "premium" to the face value
(Adds detail and background throughout.)
Noemie Bisserbe and Nathalie Tadena
Of DOW JONES NEWSWIRES
BNP Paribas (BNP.FR) said late Tuesday that it sold its North American energy business to U.S. bank Wells Fargo & Co. (WFC) in a deal marking a significant further step in the French bank's plan to cut its dollar funding needs by $65 billion before the end of 2012.
"This sale will have a limited impact on recurring revenues, but will allow BNP to achieve its year-end target far ahead of schedule," said Kepler Capital Markets analyst Pierre Flabbee.
BNP Paribas didn't disclose financial details but said it had received a premium to the business's face value, which Flabbee said suggests the assets sold were of good quality.
Along with other French banks, BNP Paribas began reducing its dollar-financed businesses last summer when U.S. money-market investors cut lending to European banks because of fears raised by the euro crisis. French banks had been particularly reliant on money-market funds.
By the end of 2011, BNP Paribas had slashed its dollar financing needs by $57 billion and said it aimed to reduce the figure by $65 billion before the end of 2012.
The bank is in the midst of a restructuring plan to increase its capital buffers and meet Europe's new capital rules.
The bank said last September it would cut risk-weighted assets by EUR70 billion and in November announced almost 1,400 job cuts at its corporate and investment bank. It had reduced the size of its balance sheet to EUR965 billion by Dec. 31, 2011, from EUR1.1 trillion on Dec. 31, 2010.
BNP Paribas said it would have a core Tier 1 capital ratio of 9% by Jan. 1, 2013 under Basel III rules, a key measure of a lender's capital strength made up of only top quality capital such as equity and retained profit.
The Paris-based lender last week reported a 51% drop in fourth-quarter net profit to EUR765 million after earnings were hit by write-downs on its Greek sovereign debt and restructuring costs.
At 1009 GMT, its shares were down 1.1% at EUR37.06, valuing the bank at EUR44.2 billion. The stock has lost over a third of its value over the past year.
-By Noemie Bisserbe and Nathalie Tadena, Dow Jones Newswires; 33-140171756; noemie.bisserbe@dowjones.com
