BancWest Isn't on Block, BNP Paribas Chief Says

By Dobbs, Kevin | American Banker, February 21, 2008 | Go to article overview

BancWest Isn't on Block, BNP Paribas Chief Says


Dobbs, Kevin, American Banker


Baudouin Prot, BNP Paribas' chief executive officer, said the French company will not sell its BancWest Corp. arm, which was hurt by last year's U.S. mortgage meltdown.

"I do not believe that selling BancWest would be in the best interest of our shareholders," Mr. Prot said in a presentation posted Wednesday morning on BNP Paribas' English-language Web site.

Some observers have said his company may have to sell off units, including BancWest, if it decides to bid for Societe Generale AG, the French company hit by a $7 billion trading scandal.

Commenting on Societe Generale "would only feed the rumor mill, so I will say nothing further on the subject" Mr. Prot said Wednesday.

"Medium term, the western United States remains one of the best places in the world to do business in retail - for demographic reasons, for medium-term sustainable growth rates, and also because the overall business environment is very good," he said.

The presentation was posted in conjunction with BNP Paribas' fourth-quarter earnings release. The Paris company, which issued an earnings estimate last month to calm jittery investors, confirmed that its profits dropped 42% from a year earlier, to $1.5 billion, on writedowns of securities and mortgage-related losses at BancWest, which cited the faltering U.S. economy for weak fourth-quarter results from its Bank of the West. For all of 2007, net income climbed 7% to $11.5 billion.

"We need to work harder to improve the performance of the BancWest platform," Mr. Prot said.

Since mid-2007 banking companies worldwide have posted cumulative writedowns of more than $150 billion on bad mortgage bets, and that total is expected to rise significantly this quarter.

However, Mr. Prot said that despite a tough environment, BancWest produced a pretax return on equity of 25% for the year, making it far too valuable an asset to let go.

"It is not a distressed asset at all," he said.

Don J. McGrath, BancWest's chairman and CEO, said in an interview that Mr. Prot's public assurances Wednesday were "very consistent" with what he has told executives within the company in the past several months. Mr. McGrath said that uncertainties about the California economy are weighing on Bank of the West, though it is poised to expand its retail banking operations steadily on the West Coast and in the Midwest, including auto and boat lending on the consumer side and farm lending on the commercial side.

With a 49% jump in agricultural commitments from 2005, to $4 billion, Bank of the West moved from No. 4 to No. 3 last year among U.S. agriculture lenders, trailing only Wells Fargo & Co. and Bank of America Corp. …

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