Corporate and Investment Banking: Introduction

4 December 2001
1

G.Chodron de Courcel et P.Blavier

Presentation Overview

1 Introduction 2 A diversified and efficient business model

3 A strong dynamic of development 4 Conclusion

Investor Day Dec. 2001 Corp and Inv.Banking

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The Corporate and Investment Banking Business Model was Appropriate in 1999...

n Comprehensive and well balanced range of business lines n Intensive cross-selling to further leverage large customer portfolio with investment banking products n Strict risk management n Tight cost control

Investor Day Dec. 2001 Corp and Inv.Banking

and was Confirmed in a Changing Environment

n Stock

l balanced

markets slump : business mix with strong positions in Fixed Income and Specialised Financing full benefit from the revival of debt financing

n Sharp l l

slowdown in business volume : focus on internal growth as long as acquisitions seemed overpriced cost control never released

n Increased credit risk : l strict risk management

BNP Paribas shows a strong resistance to the economic downturn

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Investor Day Dec. 2001 Corp and Inv.Banking

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BNP Paribas Shows a Strong Resistance to the Economic Downturn

Decrease of pre tax income of Investment banking units
Credit Suisse FB ABN Amro WCS Morgan Stanley Securities * Goldman Sachs * Merrill Lynch Socit GICG Gnrale BFI Lehman Brothers* Deutsche Bank C&IB JP Morgan BNP Paribas Chase IB CIB UBS C&IC

0% -10% -20% -30% -40% -50% -60% -70%

* Quarters ending February, May, August, November

Loss

3Q01 / 3Q00
Pre tax ROE of Corp. & Inv. banking
27% 21% 26%

9M01 / 9M00

-80%

Investor Day Dec. 2001 Corp and Inv.Banking

1999

5 2000

9M 2001

The Business Model is well Prepared for an Economic Recovery

n Through an ongoing internal and external development effort :
l further

leverage large customer portfolio

l leverage strong global positions (Equities Derivatives, Fixed Income

Derivatives, Energy & Commodities,...)

l accelerate development on most profitable products with strong growth

expectations (eg. Credit Derivatives, Securitisation, Asset Optimisation Financing, )

l use high level of free cash flows to grasp opportunities

Investor Day Dec. 2001 Corp and Inv.Banking

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2001 Achievements well in line with 2000 Targets

2000 Targets

2001 Achievements
new client segmentation and coverage implemented Corporate Banking allocated s equity decreased from 3.4 bn (Dec.99) to 2.6 bn (Sep.01) Cost/income ratio kept at around 60% Average number of business lines per client increased from 4.7(01/00) to 5.1 (01/01) (300 largest customers)

l Strengthen

the customer coverage

l Reallocation

of Corporate Banking equity towards other business lines

l Cost

control

l Increase

wallet share

Investor Day Dec. 2001 Corp and Inv.Banking

Presentation Overview

1 Introduction 2 A diversified and efficient business model

3 A strong dynamic of development 4 Conclusion

Investor Day Dec. 2001 Corp and Inv.Banking

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A Diversified Business Portfolio

Breakdown* of Gross Operating Income ( 1 922 m as of Sept 01) by principal activity

Corporate Banking 17%

Specialised financing 29%

Capital Markets + Advisory 54%

*Excluding others -98 m 9

Investor Day Dec. 2001 Corp and Inv.Banking

A Diversified Business Portfolio

Gross Operating Income* in millions (Sept. 01)
Fixed Income
56%

44%

Capital markets & Advisory

Equity + Corporate Finance

1101

340
Corporate Banking

Specialised Financing

579

Energy & Commodities

54%

*Excluding others -98 m

46%
Structured + Export Financing Investor Day Dec. 2001 Corp and Inv.Banking

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Steady Process of Equity Reallocation

8.7 bn 7.9 bn
37% 33% 22% 31%

7.6 bn

26%

31%

39%

37%

34%

1999 Corporate Banking

2000 Specialised financing

30/09/2001 Capital Markets + Advisory Others

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A Profitable and well Balanced Portfolio of Products

Pre-tax ROE
Advisory + Cap Markets Average pre tax ROE 62%
Equity

Fixed Income

Specialised Financing pre tax ROE 23% Corporate banking pre tax ROE 10%

Proportional to 9M 2001 income

-5

10

15

20

25

2000-2005 Expected Market growth (%)

Investor Day Dec. 2001 Corp and Inv.Banking

CIB Average market growth 12 10%

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A Diversified Risk Profile (I): by Economic Sectors

Breakdown of commercial commitments per economic sector as of 30 June 2001
Transportation Food processing Utilities Technology 5% 4% Insurance 1% 2% 6% Business services Car manufacturing 2% Mining 3% Machinery 4% Others 3% 6% Construction 1% Materials Chemicals 4% 5% Wholesale trade 10% Leisure 3% Manufacturing 2% States, local governments and fin. Instit. 16%

Retail 8% Energy 5% Telecoms 5% Household appliances 3%

Real Estate 2%
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A Diversified Risk Profile (II): by Geographical Breakdown

Geographical breakdown of total commitments as of 30 June 2001
Europe 48%

Middle East, Africa 3%

America 28%

Asia 17% Latin America 4%

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Despite Current Migration Risk, Share of Investment Grade Commitments Remained Stable
Breakdown of total credit risks as of 30 June 2001 by equivalent ratings

100% 80% 71% 60% 40% 20% 0% Dec 00 Default

Investor Day Dec. 2001 Corp and Inv.Banking

2%

72%

1%

28%

27%

June 01 Investment Grade

Non investment Grade

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A Rigorous Risk Policy

n Proactive and cautious provisioning policy l US branches : $ 200 m specific provision in 2000 $ 130 m specific provision for 9 M 2001 still $ 90 m sectorial risk provision since 3Q 1999 n Selective risk policy l industry specialists within the Group Risk Management (since 1995) In bp Cost of risk

61 47
31/12/99 31/12/00

60
30/09/01

Net provisions / Average Weighted assets (except 1999: end of period) 16

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A Stable Cost/Income Ratio...

Q1 2000 Net Banking Income Operating expenses Gross Operating Income Cost / Income Ratio 1 815 880 935 48 %

Q2 2000 1 540 888 653 58 %

Q3 2000 1 303 867 436 67 %

Q4 2000 1 436 888 548 62 %

Q1 2001 1 695 947 748 56 %

Q2 2001 1 463 901 563 62 %

Q3 2001 1 510 898 612 60 %

Cost / income Ratio kept at best European levels around 60% Despite a business mix progressively shifting towards Investment Banking

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well Controlled Within each Activity

n Breakdown of the Cost / Income Ratio by activity* :
90 80 70 60 50 40 30 20 10 0 Q1 2000 Q2 2000 Q3 2000 Q4 2000 Specialised Financing Q1 2001 Q2 2001 Q3 2001

Corporate Banking

Capital Markets + Advisory

Investor Day Dec. 2001 Corp and Inv.Banking

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A Cost/Income Ratio Increasingly Competitive

90% 85% 80% 75% 70% 65% 60% 55% 50% 45%
BNP ParibasCIB JP Morgan Chase IB Lehman Brothers * UBS C&IC Socit Deutsche Gnrale BFI Bank C&IB (99: GC&I) Merrill Lynch GICG Goldman Sachs * Morgan Stanley Securities * Credit Suisse FB ABN Amro WCS

1999

2000

9 M 2001

* Quarters ending February, May, August, November

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Presentation Overview

1 Introduction 2 A diversified and efficient business model

3 A strong dynamic of development 4 Conclusion

Investor Day Dec. 2001 Corp and Inv.Banking

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Business lines

Investor Day Dec. 2001 Corp and Inv.Banking

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Business-lines : key Issues for Growth

n Equity
l

Equity Derivatives :

Reinforce and develop client distribution on the three segments: institutions, corporates, retail Pursue expansion outside Europe (especially United States by organic growth) Better leverage the BNP Paribas distribution channels

Equity Cash :

Rationalise & leverage our European product to increase brand recognition and market share with big clients Concentration on core businesses to strengthen them in Asia Pacific
retail broking units in Asia & Australia have been sold or closed extend BNP Paribas Peregrine current franchise (Hong Kong) to other Asian countries and Australia

n Advisory and Equity Capital Markets

Investor Day Dec. 2001 Corp and Inv.Banking

Leverage strong clientele coverage to develop European positions (eg UK, Germany and Italy) Consolidate its leading position in France Strengthen our equity-linked business Conduct opportunistic acquisitions
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Business-lines : key Issues for Growth

n Fixed income derivatives
l l l

Continue to aggressively broaden our client franchise by leveraging effectively all CIB lending relationships Capitalise on our superior derivative product platform and risk management tools in order to offer innovative solutions to clients Streamline further our deal processing in order to lower operation cost per transaction

n Forex :
l l l

Consolidate industrial organisation + Shift generic business to electronic trading platforms Develop added-value services and strategic use of Forex Intensify Sales effort

n Credit market :
l l l l

Credit Derivatives: move franchise toward major leagueplayers. Revenues growth mainly from Europe and Japan Securitisation: diversify and balance the business and develop flow business across Europe High Grade: maintain leadership on Corporate Bonds and improve number and diversity of deals. Further develop the $ franchise High Yield: maintain full lead manager capability in Europe

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Business-lines : key issues for growth

n Structured Finance
l

Leverage strong global positioning (syndicated loans, project finance, media telecom) Consolidate leadership position in acquisition finance in Europe and on cross border transactions Develop growing businesses: optimisation and asset finance (Capstar Partners)

l l

n Energy & Commodities : consolidate world-wide leading position while maintaining good risk control
l l l

Consolidate our strong franchise in Trade Finance and Corporate Financing Develop our structured pre-export activity in key producing countries Leverage our strong sectorial expertise by expanding our energy and metal derivatives activities and on cross selling products of other business lines Enlarge our product offer : deconsolidation solutions, global price risk solutions, reserve based lending
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Business-lines : key issues for growth

n International Trade
l l

Pursue international development Increase industrialisation process (opening of 70 trade centres on the five continents)

n Corporate Banking
l l

Use large client base to cross-sell all products Optimise equity allocation through portfolio management

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Customer coverage

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A Dynamic of Growth Enhanced by a Client Focused Set-up

n Financial Institution Group and Large Corporates : A customer-based organisation
l

Actively develop cross-sales initiatives between the business-lines

Offer multi-business lines complex solutions

Anticipating customer needs and drawing up tailor-made solutions in close collaboration with the business lines involved

Be more and more identified as a problem solver

Defining a systematic marketing policy, in particular with respect to innovative products

Apply systematic cross-selling methodology to detect business opportunities

Manage the global relationship world-wide by guiding clients abroad

Become a core banker for our clients

Provide systematic risk analysis

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A Client Focused Set-up

Client relationships Coverage
Senior Bankers 27 Global Relationship Managers 36 Other relationships 12 000

Strategic 140 Core 370

Relationship Managers 600

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Presentation Overview

1 Introduction 2 A diversified and efficient business model

3 The dynamic of development 4 Conclusion

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Conclusion
Tight cost control Diversified business mix Strict risk management

Recurrent performance Continued leverage of customers portfolio Strong free cash flow Ability to benefit from any rebound in activity

Strategy based on value creation

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