2012 Registration document and annual financial report - BNP Paribas

2CORPORATEGOVERNANCEReport of the Chairman of the Board of Directors on the manner of preparation and organisationof the work of the Board and on the internal control procedures implemented by the c ompany23. THE WORK OF THE BOARD IN 20123.a StrategyThe Board of Directors formulates BNP Paribas’ strategy and overallbusiness objectives based on proposals submitted by ExecutiveManagement, the key elements of which are presented following adocumented in-house process.It examines and decides on strategic operations in accordance withits Internal Rules. It oversees the implementation of the objectives ithas approved, particularly in the course of discussions on the financialstatements and on the budget.The Board is also kept regularly informed of the Group’s cash positionand ongoing commitments.■ The Board discussed the economic situation and the state of thefinancial markets on several occasions. It has monitored theimplementation of the measures proposed by Executive Managementto adjust the Bank’s capital in line with regulatory requirements,together with its balance sheet size and liquidity.■ It examined progress in the work done by Executive Management onthe Recovery and Resolution Plan required by the Financial StabilityBoard and the Autorité de Contrôle Prudentiel (ACP).■ It discussed comparative share price trends for the major global banksand BNP Paribas’ relative position with regard to credit ratings.■ It examined the strategy of BNP Paribas Investment Partners.■ It approved the proposed sale of the reserve based lend ing franchisebased in Houston and in Canada, and the proposed sale of a stakeof less than 30% in Klé pierre. It examined the proposal to haveBNP Paribas SA registered as a Swap dealer.■ It adopted the proposed restructuring of the Specialised Financingbusiness and BNP Paribas’ proposed takeover of SAS Foncière dela Compagnie Bancaire. It approved the renewal of the AmericanDepositary Receipt (ADR) programme.■ It examined BNP Paribas’ policy with regard to corporate socialresponsibility (CSR ).■ It was informed of the results of the annual survey on employeesatisfaction (Global People Survey) and of the actions flowing fromthat.■ It debated the Liikanen report and the draft French banking law.■ It was informed of the internal review of certain U.S. dollar paymentsconducted by the Bank as a result of discussions with U.S. authoritiesin the context of the enforcement of the economic sanctions decidedby the United States of America.■ It was informed of the proposed issue of BNP Paribas bonds convertibleinto Pargesa shares.■ It adopted the proposed sale of BNP Paribas SA’s subsidiary in Egyptto Emirates NBD P.J.S.C.■ It did not consider any strategic proposal that was not within thescope of the defined strategy and which would therefore have requiredprior approval. It was updated on the progress of several proposalspreviously discussed.■ As in previous years, the Board of Directors met for a strategic seminaron profitability forecasts, on changes in its competitive environment,and on the envisaged long-term programme to make changes to itsorganisation, Simple and Efficient. It was presented with analysesrelating to CIB, domestic markets, digital banking, and certaindeveloping geographical areas and businesses (Asia; BNP ParibasCardif; Turkey).3.b Risks, liquidity, compliance and internalcontrolThe Board of Directors has regularly discussed the economic, financialand regulatory (and in particular prudential) environment in the lightof the report of the Internal Control, Risks and Compliance Committeebased on information provided by the Executive Management. It hasbeen informed of trends in terms of risks and of the liquidity situation.Risks and liquidity■ Throughout the year, the Board of Directors discussed liquidity policyhaving regard to the situation of the markets and the measures adoptedor contemplated by international or national regulatory authorities.Against a background of major instability, it was informed of the stepstaken by the Executive Management to deal with the changes andwith their consequences in terms of the quantity, quality and cost ofliquidity. It noted the measures taken by the Executive Managementto monitor the financing requirements of the business units and theresults obtained in this area in 2012.■ It examined the pricing and maturity conditions of the issues completedin 2011 and 2012.■ It was informed of the progress of the Recovery and Resolution Plan(RRP) established at the request of the regulators, the updated versionof which was provided to the Autorité de Contrôle Prudentiel (ACP).■ It approved BNP Paribas’ Risk Appetite Statement as proposed to itby the Executive Management together with the chart setting out theindicators measured to represent this risk profile.■ It examined the Internal Control, Risk Management and ComplianceCommittee’s work on the Group’s risks. It discussed the main issuesidentified, particularly as regards exposure to sovereign debt. Itwas regularly informed of trends in the cost of risk by business andgeographical area, and of the main risks identified.■ It considered the findings of the work performed jointly by the FinancialStatements Committee and the Internal Control, Risk Management andCompliance Committee based on the 2011 report on risk measurementand monitoring prepared in accordance with the provisions ofRegulation CRBF 97-02. It assessed the effectiveness of the policiesand systems in place.502012 Registration document and annual financial report - BNP PARIBAS