2012 Registration document and annual financial report - BNP Paribas

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5RISKSAND CAPITAL ADEQUACYCapital management and capital adequacySIGNIFICANT SUBSIDIARIESThe capital requirements of BNP Paribas’ significant subgroups andsubsidiaries are given in Appendix.The following subgroups are considered significant, based on the criterionthat their risk-weighted assets amount to more than 3% of the Group’stotal risk-weighted assets at 31 December 2012:■ BNP Paribas Fortis;■ Banca Nazionale del Lavoro (BNL);■ BancWest;■ BNP Paribas Personal Finance;■ BGL BNP Paribas.The risk-weighted assets reported correspond to the sub-consolidationscope of each group. Information related to the concerned perimetersis described in note 8.b to the Financial Statements under the followingheadings: Belux Retail Banking, Retail Banking in Italy (BNL bancacommerciale), Retail Banking in the United States and BNP ParibasPersonal Finance. Differences between consolidation and prudentialperimeters exist for these five significant subsidiaries, as mentioned insection 5.2.INDIVIDUAL MONITORING BY THE FRENCHSUPERVISORTwo entities, BNP Personal Finance and BNP Paribas Home Loan SFH,are monitored individually by the French supervisor (Autorité de ContrôlePrudentiel), according to the supervisor’s guidelines and pursuant todiscussions between this authority and BNP Paribas.REGULATORY CAPITAL [Audited] (1)5The BNP Paribas Group is required to comply with the French regulationthat transposes European Union capital adequacy directives (Directiveon the Capital Adequacy of Investment Firms and Credit Institutions andFinancial Conglomerates Directive) into French law.In the various countries in which the Group operates, BNP Paribas alsocomplies with specific regulatory ratios in line with procedures controlledby the relevant supervisory authorities. These ratios mainly address theissues of capital adequacy, risk concentration, liquidity and asset/liabilitymismatches.Since 1 January 2008, the capital adequacy ratio has been calculatedin accordance with the Decree issued by the Ministry of the Economy,Finance and Industry on 20 February 2007 introducing the Basel 2 capitaladequacy ratio, i.e. regulatory capital expressed as a percentage of thesum of:■ risk-weighted assets calculated using the standardised approach orthe internal ratings based approach depending on the entity or Groupbusiness concerned;■ the regulatory capital requirement for market and operational risks,multiplied by 12.5. The capital requirement for operational riskis measured using the basic indicator, standardised or AdvancedMeasurement Approach, depending on the Group entity concerned.BREAKDOWN OF REGULATORY CAPITALRegulatory capital is determined in accordance with Comité de laRéglementation Bancaire et Financière (CRBF) regulation 90-02 dated23 February 1990. It comprises three components – Tier 1 capital, Tier 2capital and Tier 3 capital – determined as follows:■ core capital (Tier 1) corresponds to consolidated equity (excludingunrealised or deferred gains and losses), adjusted for certain itemsknown as “prudential filters”. The main adjustments consist of(i) deducting the planned dividend for the year, as well as goodwilland other intangibles, (ii) excluding consolidated subsidiaries that arenot subject to banking regulations – mainly insurance companies –and (iii) applying limits to the eligibility of certain securities, such asundated super subordinated notes;■ supplementary capital (Tier 2) comprises some subordinated debtand any positive credit and counterparty risk valuation differencesbetween provisions for incurred losses taken under the book methodand expected losses on credit exposure measured using the internalratings based approach;■ a discount is applied to subordinated debt with a maturity of less thanfive years, and dated subordinated debt included in Tier 2 capital iscapped at the equivalent of 50% of Tier 1 capital. Total Tier 2 capitalis capped at the equivalent of 100% of Tier 1 capital;■ Tier 3 capital comprises subordinated debt with shorter maturitiesand can only be used to cover a certain proportion of market risks;■ the following items are deducted for the purpose of calculatingregulatory capital, half from Tier 1 capital and half from Tier 2 capital:(i) the carrying amount of investments in credit institutions and financecompanies accounted for by the equity method; (ii) the regulatorycapital of credit institutions and finance companies more than 10%owned by the Group; (iii) the portion of expected losses on creditexposure measured using the internal ratings based approach whichis not covered by provisions and other value adjustments.(1) In the Registration document, information identified by the ranking “Audited” are information which are integral part of the notes to the consolidated financial statements underthe information required by IFRS 7, IFRS 4 and IAS 1, and are covered by the opinion of the Statutory Auditors on the consolidated Financial statements.2302012 Registration document and annual financial report - BNP PARIBAS
RISKS AND CAPITAL ADEQUACYCapital management and capital adequacy5➤ TABLE 4: REGULATORY CAPITALIn millions of euros 31 D ec ember 2012 31 December 2011Consolidated equity (1) 94,422 85,626Subordinated debt eligible as equity (2) 2,122 3,435Regulatory deductions ( 21,333 ) ( 18,068 )Goodwill ( 10,933) ( 11,783)Intangible assets ( 2,318) ( 2,146)Deductions of 50% for uneligible items ( 1,574) ( 1,653 )of which equity investments in non-consolidated credit or financial institutionsmore than 10%-owned ( 501 ) ( 672 )of which investments in credit or financial institutions associates ( 821) ( 756 )of which subordinated loans to credit or financial institutions more than 10%-owned ( 248 ) ( 222 )Positive equity accounting difference on insurance companies ( 1,633 ) ( 629)Changes in fair value of available-for-sale financial assets and reclassified loans and receivablesrecognised directly in equity ( 980 ) 2,616Changes in fair value of hedging derivatives recognised directly in equity ( 1,665 ) ( 1,099 )Revaluation of own debt 17 ( 950 )Proposed dividend (3) ( 1,858 ) ( 1,430 )Non-eligible minority interests ( 384 ) ( 733 )Other ( 5 ) ( 261 )CORE TIER 1 CAPITAL 75,211 70,993Subordinated debt eligible as equity 10,555 13,874Deductions of 50% for un eligible items ( 1,574 ) ( 1,653 )of which equity investments in non-consolidated credit or financial institutionsmore than 10%-owned ( 501 ) ( 672 )of which investments in credit or financial institutions associates ( 821 ) ( 756 )of which subordinated loans to credit or financial institutions more than 10%-owned ( 248) ( 222 )Positive difference between provisions and expected losses 205 548TIER 2 CAPITAL 9,186 12,769TIER 3 CAPITAL 1,460 2,200REGULATORY CAPITAL 85,857 85,962(1) Statement of changes in shareholders’ equity (financial statements 4.5).(2) Notes to the financial statements 5.a and 5.i.(3) Dividend to be recommended at the Annual General Meeting of Shareholders.52012 Registration document and annual financial report - BNP PARIBAS 231
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2012REGISTRATION DOCUMENTAND ANNUAL
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2012 Registration documentand annua
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1GROUP PRESENTATION1.1 Group presen
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GROUP PRESENTATIONPresentation of a
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1GROUPPRESENTATIONBNP Paribas and i
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1GROUPPRESENTATION1282012 Registrat
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2CORPORATEGOVERNANCEBoard of Direct
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2CORPORATEGOVERNANCEReport of the C
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2CORPORATEGOVERNANCEExecutive Commi
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32012REVIEW OF OPERATIONSBNP Pariba
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32012REVIEW OF OPERATIONSBalance sh
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32012REVIEW OF OPERATIONSProfit and
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32012REVIEW OF OPERATIONSProfit and
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32012REVIEW OF OPERATIONSOutlook3.6
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32012REVIEW OF OPERATIONSLiquidity
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4CONSOLIDATEDFINANCIAL STATEMENTS -
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5RISKSAND CAPITAL ADEQUACYSovereign
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5RISKSAND CAPITAL ADEQUACYSovereign
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5RISKSAND CAPITAL ADEQUACYLiquidity
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5RISKSAND CAPITAL ADEQUACYOperation
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5RISKSAND CAPITAL ADEQUACYComplianc
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5RISKSAND CAPITAL ADEQUACYInsurance
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5RISKSAND CAPITAL ADEQUACYInsurance
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5RISKSAND CAPITAL ADEQUACYAppendice
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5RISKSAND CAPITAL ADEQUACYAppendix
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6INFORMATIONON THE PARENT COMPANY F
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7ARESPONSIBLE BANK: INFORMATION ON
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8GENERALINFORMATIONDocuments on dis
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8GENERALINFORMATIONFounding documen
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8GENERALINFORMATIONStatutory Audito
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8GENERALINFORMATIONStatutory Audito
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9STATUTORYAUDITORSStatutory Auditor
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10PERSON RESPONSIBLE FOR THE REGIST
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11TABLE OF CONCORDANCEHeadings as l
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HEAD OFFICE16, boulevard des Italie
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