Spotlight: BNP Paribas

Banking in France; an interesting business nowadays as France is becoming more and more the partypooper in the Eurozone. Let's take a look at how this affects BNP Paribas (EPA:BNP), one of France's biggest banks. First we note that the BNP stock is down 14.09% year-to-date, which may not come as a surprise given the recent economic problems in France. The first problem for BNP lies on its credit side, since banks in France are perceived riskier than its German competitors for example. As a result, banks in France are still able to attract capital, but at a higher cost, because lenders want to be compensated for the higher risk they take in financing French banks. BNP is not only feeling pressure on its credit side, but on the debit side as well. International companies in need of financing also want to avoid risk, causing them to do business with safer banks than French banks, resulting in BNP to miss out on revenues. Yet, BNP is keeping revenues at a fairly steady level since 2009 as revenues ranged $38.8 and $43.8 billion. But this also why BNP is not an interesting stock, because the growth rate is low if not not-existent. Moreover, BNP is subject to hard sanctions ($9 billion sanctions already, while BNP pleaded guilty to other violations, so they might even face more sanctions), which disables BNP in expanding. A final remark should be made on the new CEO; Jean Lemierre, who has more of a political than a banking background. It is funny to see BNP positioning itself as the bank for a changing world, while BNP is itself not very able to cope with the changes in the world. In summary, we think BNP Paribas is not a stock you want in your portfolio right now due to its lack in growth possibilities and economic environment.