BNP Paribas: A rudderless juggernaut?

BNP Paribas headquarters in Montréal. [Azartaz/Flickr]

In a thorough and critical documentary, two filmmakers raise questions about the disproportionate power of BNP Paribas, one of Europe’s largest banks. The documentary is a case study calling into question the credibility of European banking regulation. EURACTIV France reports.

Is European finance well regulated? Judging from Xavier Harel and Thomas Lafarge’s documentary on the inside story of French lender BNP Paribas, the French bank bosses the regulators, rather than vice versa.

This situation was inherited from the 2008 crisis. At the time, the juggernaut was, like most of the largest European banks, exposed to enormous losses on the American housing market and then, slightly later, to Greek debt.

According to the “too big to fail” principle, French and European institutions would do anything to save the bank and bail it out.

Moreover, a striking image deconstructed by the documentary illustrates this argument. It is of a 2008 crisis meeting in Christine’s Lagarde’s office, the then French finance minister. However, the dozen participants’ eyes are not trained on her but on Michel Pébereau, the BNP Paribas chairman.

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During an investigation which lasted for several years, Harel and Lafarge won the confidence of employees and former employees who do not recognise their bank in the cavalier attitude it assumes on many topics.

“We met 120 people, including about 40 from BNP Paribas but only five or six agreed to give an account: people who are leaving or will leave the world of finance,” Harel stated.

While it was originally intended to be shown on Canal+, the documentary was cancelled following the arrival of Vincent Bolloré as chair of its supervisory board in September 2015. It was later picked up by the public channel France 3 and will be broadcast on 4 October.

Not many actors in finance risk speaking out against the hand that once fed them, through one former banker specialising in managing large funds says he encouraged the bank’s wealthy clients to engage in tax evasion via Switzerland. This is strictly forbidden by European laws.

There was also a code of silence over the embargoes bypassed by the French bank which earned the bank a fine of $8.9 billion from the United States for working with the Sudanese regime, which is accused of committing genocide.

Europe and European regulation also received the same treatment.

Europe’s first reaction to the crisis, which involved separating investment banking from retail banking, did not result in any concrete consequences for the bank. “It didn’t change anything, nothing at all,” asserted a former BNP Paribas employee.

The journalists also highlight the close ties between major institutions and the bank. For example, Dominique Strauss-Kahn’s advisers who are now at the IMF and François Villeroy de Galhau – the governor of the Banque de France – who is being considered to run the European Central Bank, are former BNP Paribas employees.

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“I don’t see a lawless bank, I see bankers making the law,” summarised the economist Jézabel Couppey Soubeyran, who teaches at l’Université Paris 1 Panthéon-Sorbonne.

This is an argument highlighted by Harel, who says that large European banks are under-valued in comparison to their American rivals.

“It’s a model which is causing concerns among investors,” he stated. The latest banking scandals, whether it be Danske Bank being accused of large-scale money laundering in Estonia, or the alleged corruption of the central Latvian bank governor, will not be of any comfort.

The documentary “BNP Paribas, dans les eaux troubles de la première banque européenne” will be broadcast on Thursday 4 October at 11.30pm on France 3.

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