2012 Registration document and annual financial report - BNP Paribas

CONSOLIDATED FINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2012Notes to the financial statements45.i DEBT SECURITIES AND SUBORDINATED DEBTThis note covers all debt securities in issue and subordinated debt measured at amortised cost and designated at fair value through profit or loss.➤ DEBT SECURITIES AT FAIR VALUE THROUGH PROFIT OR LOSS (NOTE 5.a )Issuer/Issue dateIn millions of eurosCurrencyOriginalamountin foreigncurrency(in millions)Date of callor intereststep-upInterestrateIntereststep-upSubordinationranking (1)Conditionsprecedentfor couponpayment (3)31 December201231 December2011Debt securities 1 40,799 37,987Subordinated debt 1,489 2,393Redeemable subordinated debt(2)2 781 1,283Perpetual subordinated debt 708 1,110Fortis Banque SA Dec. 2007 EUR 3,000 Dec-14 3-monthEuribor+200 bp- 5 A 592 1,025Others - - - - - - 116 85(1) The subordination ranking reflects where the debt stands in the order of priority for repayment against other financial liabilities.(2) After agreement from the banking supervisory authority and at the issuer’s initiative, these debt issues may contain a call provision authorising theGroup to redeem the securities prior to maturity by repurchasing them in the stock market, via public tender offers, or in the case of private placementsover the counter. Debt issued by BNP Paribas SA or foreign subsidiaries of the Group via placements in the international markets may be subjectto early redemption of the capital and early payment of interest due at maturity at the issuer’s discretion on or after a date stipulated in the issueparticulars (call option), or in the event that changes in the applicable tax rules oblige the BNP Paribas Group issuer to compensate debt-holders for theconsequences of such changes. Redemption may be subject to a notice period of between 15 and 60 days, and is in all cases subject to approval by thebanking supervisory authorities.(3) Conditions precedent for coupon payment.A Coupon payments are halted should the issuer have insufficient capital or the underwriters become insolvent or when the dividend declared forAgeas shares falls below a certain threshold .4The perpetual subordinated debt recognised at fair value through profit orloss chiefly consists of an issue by Fortis Banque SA in December 2007 ofConvertible And Subordinated Hybrid Equity-linked Securities (CASHES).The CASHES are perpetual securities but may be exchanged for FortisSA/NV (now Ageas) shares at the holder’s sole discretion at a priceof EUR 23.94. However, as of 19 December 2014, the CASHES will beautomatically exchanged into Fortis SA/NV shares if their price is equalto or higher than EUR 35.91 for twenty consecutive trading days. Theprincipal amount will never be redeemed in cash. The rights of theCASHES holders are limited to the 125, 313, 283 Fortis SA/NV shares thatFortis Bank acquired on the date of issuance of the CASHES and pledgedto them.Fortis SA/NV and Fortis Banque have entered into a Relative PerformanceNote (RPN) contract, the value of which varies contractually so as tooffset the impact on Fortis Banque of the relative difference betweenchanges in the value of the CASHES and changes in the value of theFortis SA/NV shares.On 25 January 2012, Ageas and Fortis Bank signed an agreementconcerning the partial settlement of the RPN and the purchase by FortisBank of all perpetual subordinated debts issued in 2001 for a nominalamount of EUR 1, 000 million (recognised as debt at amortised cost),of which Ageas holds EUR 953 million. The settlement of the RPN andthe purchase of the perpetual subordinated notes issued in 2001 bothdepended on BNP Paribas achieving a minimum success rate of 50% inthe CASHES tender offer.BNP Paribas launched a cash offer for the CASHES, then converted theCASHES acquired into underlying Ageas shares; BNP Paribas receivedcompensation from Ageas, as the RPN mechanism ceased to existproportionally to the CASHES converted.The offer was closed on 30 January with a success rate of 63% at a priceof 47.5%.Following this operation, the net balance of the RPN represents asubordinated liability of EUR 241 million that is eligible to Tier 1 capitalat 31 December 2012.2012 Registration document and annual financial report - BNP PARIBAS 151