BNP Paribas is stung by Greek debt exposure

BNP Paribas fell short of profit expectations for the second quarter yesterday, hit by its Greek exposure and sluggish growth in its retail and investment banking units.

Chief executive Baudouin Prot said loan loss provisions would fall further this year, despite a €534m (£466m) charge this quarter linked to Greece.

BNP Paribas has the biggest exposure to Greek sovereign bonds among its French peers, at close to €5bn. It was a key player in coordinating the private sector Greek bailout, which resulted in the charge.

The bank said it held €2.3bn of Greek bonds maturing by the end of December 2020 and affected by its bailout participation. It will take a 21 per cent haircut on these, meaning it will not recover their full value.

Prot said he was confident that a bailout plan being worked on with banks and insurers exposed to the bonds would fall into place swiftly, and that it was likely enough contributors would sign up to make it work.

Net income was lower than expected at €2.13bn but flat compared to the same period in 2010 and short of the €2.23bn prediction from analysts. Revenues of €10.9bn also fell below the €11.2bn that was forecast by analysts.