2012 Registration document and annual financial report - BNP Paribas

CORPORATE GOVERNANCEReport 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 ompany2Compliance and internal control■ The Board of Directors was briefed by the Chairman of the InternalControl, Risk Management and Compliance Committee on the2011 compliance report and the 2011 report on permanentcontrol, operational risk and business continuity. It was informedof developments in the resources allocated to internal control. Itexamined the update of the internal control charter, and approvedthe section of the Chairman’s report on internal control procedures.■ It was briefed on the key results of periodic controls performed in 2011and the first half of 2012, as well a summary of the key observationsmade by General Inspection .■ The Board noted that the audit plans presented by the StatutoryAuditors enabled them to perform their work satisfactorily.■ It was briefed on the findings of the market trading control and securityprogramme implemented by Executive Management. It reviewed theamount of gains and losses due to operational incidents and majordisputes.■ It adopted measures to complete the centralisation of the subsidiaries’periodic control systems without affecting the accountability of theirgoverning bodies.■ The Board was briefed on the internal review of certain U.S. dollarpayments conducted by the Bank as a result of discussions with U.S.authorities in the context of the enforcement of the economic sanctionsdecided by the United States of America .■ The Board heard the report on the discussions held by the InternalControl, Risk Management and Compliance Committee with the Headof General Inspection , the Head of Periodic Control, the Head ofPermanent Control and Compliance, the Head of ALM-Treasury andthe Head of Group Risk Management, whose remit covers the wholeof the Group’s risk policy.■ The Board reviewed the exchange of correspondence with the Autoritéde Contrôle Prudentiel and the Autorité des Marchés Financiers(AMF), and the comments of the Internal Control, Risk Managementand Compliance Committee. It was informed about relations with theforeign regulators, as reported by Executive Management.3.c Budget, financial statements and results,financial management and informationBudgetIn accordance with its usual practice, the Board examined and approvedthe draft budget for 2013 at its last meeting of the year, as presentedby Executive Management for the Group as a whole and for its activitiesand major business lines.Financial statements and results■ The Board examined and approved the results for the fourth quarterof 2011, full year 2011 and the first three quarters of 2012.■ Each quarter, it examined trends in revenues and cost/income ratioby business.■ For each period reviewed, the Board heard a summary of the FinancialStatements Committee’s work and the findings of the Group’s StatutoryAuditors, who routinely attend meetings dealing with the results andfinancial statements.■ The Board discussed trends in the solvency ratio in the light ofdecisions taken by the regulator in this area. It was briefed on theimpacts on revenue and results of measures taken to reduce theGroup’s financing needs, particularly in dollars. It examined the returnon equity allocated to the Group’s businesses.■ It reviewed progress in the balance sheet deleverag ing plan andexamined the dollar cash balance sheet and its evolution during 2012.■ The Board was briefed on the key choices made concerning theapplication of accounting standards, which were examined by theFinancial Statements Committee on the joint report of the StatutoryAuditors and the Group’s Chief Financial Officer.■ It heard the comments of the Financial Statements Committee onthe accounting internal control report reviewed each quarter by thecommittee.■ The Board heard a report of the discussions held by the FinancialStatements Committee with the Statutory Auditors and the Group’sChief Financial Officers, without the presence of the Chairman andChief Executive Officer.Financial management■ The Board received the report on medium and long-term financingin 2011 and the first half of 2012. It heard Executive Management’scomments on the terms of implementation of the various programmes.It was also regularly informed of the net margins generated on newlending.■ It examined the Internal Capital Adequacy Assessment Processreport, which was presented for the first time to a joint meeting ofthe Financial Statements Committee and Internal Control, Risks andCompliance Committee. The purpose of the report was to ensurethat the Bank properly assessed its risks (risks of concentration, andoperational and computer risks), that it had put adequate controls inplace, and that it had and would have the necessary capital to dealwith those risks.■ It was informed of the share purchases made pursuant to theauthorisations given by the General Meeting.Financial information■ At each meeting devoted to results, the Board examined the draftpress releases. It approved the draft report of the Board of Directorsfor 2011 as well as the draft report of the Chairman on internal controlprocedures relating to the preparation and processing of accountingand financial information.■ The Bank’s long-term ratings from financial rating firms are given inthe introduction to the Registration document and annual financialreport.22012 Registration document and annual financial report - BNP PARIBAS 51