EC3205-ECONOMICS OF INFORMATION
BNP PARIBAS

BNP is a French bank and financial services company with headquarters in Paris and a second global headquarters in London.it was formed through the merger of banque Nationale and Paribas in 2000 and is one of the largest banks in the world. Based on 2012 information BNP Paribas was ranked as the fourth largest bank in the world, as measured by total assets, by Bloomberg and Forbes. In 2013 BNP Paribas was awarded the bank of the year award by the international Financing review.
“The IFR awards are a key industry benchmark and bank of the year is the top honour awarded.”
Thomas Reuters, leading financial industry publication.

Market structure
Firms will maximise profits at the output level where marginal revenue =marginal cost. The fact of the matter is firms operate in a large variety of environments. These different environments are based on different market conditions that influence the behaviour of different firms in different ways. In order to analyse these behaviours, economists have identified characteristics that make some firms similar to each other and other firms different from one another. This has led to the study of firms based on four main market structures. * Perfect competition * Monopolistic competition * Oligopoly * Monopoly

The features of each market structure relate to differences in the demand curves faced by firms in each category. The identifying characteristics for each type of market structure include the number of firms in the industry, whether the products are identical (homogenous), ease of entry for new firms in to the industry, and the power that the firm has to influence the price of its products.
The market structure that BNP Paribas falls in to is the one of an oligopoly similar to the majority of banks. An oligopoly is a market structure in which a few firms dominate. In the banking industry firms offer virtually identical services such as mortgages, overdrafts, saving accounts etc. Much of the competition between businesses in this market structure is in terms of marketing their particular brand.
There are two fundamental features that distinguish oligopoly from other market structures.

Barriers to entry
In order to start up a bank there is a large capital investment needed, in addition to this
“Existing banks in the market have an informational advantage over other potential entrants by virtue of their established relationships with borrowers seeking credit, and they are able to use this advantage to prevent other banks from entering the market. Potential entrants into a banking market suffer an adverse selection effect stemming from their inability to determine whether applicant borrowers are new borrowers seeking financing for their untested projects or are in fact borrowers who have previously been rejected by an incumbent bank and are looking elsewhere for financing.” BNP Paribas group has no such problems in this area because the merger in 2000 came from BNP the first French bank, whose origins date back to 1848 and that of Paribas, an investment bank founded in 1872.
The RAND Journal of Economics
Adverse Selection as a Barrier to Entry in the Banking Industry
Giovanni Dell'Ariccia, Ezra Friedman and Robert Marquez

Increased regulation
Since the recent economic downturn and banking crisis of 2008/2009 where the current bank regulations seemed to have failed there has been a tightening on regulation in the sector, making it now more than ever harder for new banks to enter this area. Under the new regulation brought in banks have to hold more assets which gives established banks like BNP Paribas a distinct advantage over new banks that are just entering in to this industry

Employment
“With approximately 200,000 employees worldwide and a presence in more than 80 countries, the BNP Paribas Group is a major employer, particularly in Europe, where its four domestic markets are located.” http://www.bnpparibas.com/en/careers/why-choose-bnp-paribas BNP Paribas put a big emphasis on trusting their employees, through there long term recruitment and career management they provide training which is designed to support professional development.
BNP Paribas also pride themselves on the open minded approach when it comes to company culture and diversity in the work place.
“Our belief is that diversity is a powerful tool for driving success and innovation. We value it and are proactively committed to supporting it, both within our organisation and the society as a whole. The richness and diversity of our employees’ backgrounds is the result of recruitment process and career management based on non-discrimination and equal opportunity principles.”
The company also promotes a healthy lifestyle for their workers through one of their many human resource policies. This shows that they value there employees well-being and have put guidelines in place to help achieve this.
“A healthy work-life balance is an essential factor in creating well-being at work: accordingly, it is a key focus of our Human Resources policy. Beyond time management and work organisation processes, our business lines have launched a wide range of initiatives, such as “Family Days”, which aim to give employees’ children an idea of their parents’ working environment, and contribute to broadening our perspective of all our employees on the constraints and obligations faced by working parents.” http://www.bnpparibas.com/en/careers/why-choose-bnp-paribas Product range
BNP Paribas offer a wide range of financial services across a variety of different sectors to cater for its clients varying financial requirements. Shown below are the different products that BNP Paribas offer.

Managing your risks and assets * Credit * Foreign exchange * Interest rates * Commodity derivatives * Flow and financing * Prime brokerage * Structured equity * Asset management

Financing your business

* Aviation finance * Corporate acquisition finance * Debt capital markets * Energy and commodity financing * Export finance * Media and telecom finance * Real estate finance * Leveraged finance * Loan syndications and trading * Shipping finance * Optimization and structured leasing * Project finance

Expanding your business * Equity capital markets * Mergers and acquisitions
Servicing your operational needs * Electronic markets * Global trade solutions * International cash management * Correspondent banking * E-banking services * Securities services

Profitability For BNP Paribas gross operating income was up 2.4 per cent at 2.7 billion euros from 2011.BNP proposed a 2013 dividend of 1.50 euros a share, unchanged from 2012. The main reason for the unchanged dividend to shareholders from 2012 was linked to the 76% drop in quarterly profits after the company booked a $1.1 billion litigation provision in case it faces fines for breach of U.S sanctions. This setback is closely linked to a string of investigations within the banking industry because of new regulations in the wake of the 2008 financial crisis.

Core philosophy

Social corporate responsibility
“Corporate Social Responsibility is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders. CSR is generally understood as being the way through which a company achieves a balance of economic, environmental and social imperatives (“Triple-Bottom-Line- Approach”), while at the same time addressing the expectations of shareholders and stakeholders.” http://www.unido.org/en/what-we-do/trade/csr/what-is-csr.html BNP Paribas take the challenge of corporate social responsibility very serious within their organisation. They have undertaken a major programme in corporate social responsibility witch will help them to adapt to the change in society, while sustaining the group’s performance and stability.
The new corporate social responsibility programme that the company have launched is designed around four pillars. The four pillars are as followed: * Our economic responsibility * Financing the economy in an ethical manner

The primary responsibility of a bank is to finance the economy, this means investing in the projects of individuals and businesses to support growth. In order for the company to be able to be able to maintain this duty over the long term, they must first ensure their own strength regardless of the financial climate. In order for a bank to be in a position to provide credit it must have the necessary funds, the higher the capital the less change of failure in this current economic uncertainty. A large capital reserve also gives the bank the power to finance loans and provide other forms of credit.

Since 2008, BNP Paribas has more than doubled its capital, from 29 billion euros in 2008 to 58.9 billion euros as of 31 December 2011.
In 2012, 93% of 2011 earnings were reinvested in our capital, to continue to strengthen our capital base and therefore our stability. http://www.bnpparibas.com/en/responsible-bank/csr/economic-responsibility/financing-the-real-economy For BNP Paribas, business ethics are a priority. In line with this the Group has adopted a responsible approach to its affairs with individual customers, and to the way it manages the social and environmental impact of its financing and investment activities. In Retail Banking, BNP Paribas places particular importance on customer satisfaction, which has been increasing gradually in the last few years.

Worldwide, Retail Banking has embraced numerous initiatives to improve the transparency of products and services and increase understanding of banking issues.
“In France, the Group launched the “Straight Talk” campaign to address the practical concerns of customers and raise their awareness of banking issues. This campaign involves:
A website www.parlonsvrai.bnpparibas.net. Since 2011, over 200,000 web users have visited the site, and 900 questions have been asked on it.
“Straight Talk” workshops dealing with various themes such as preparing for retirement, rental property and savings products. In 2012, 11,500 customers took part in 1,200 of these workshops.”

http://www.bnpparibas.com/en/responsible-bank/csr/economic-responsibility/business-ethics

* Our social responsibility * Pursing a committed and fair human resources policy

People lie at the heart of BNP Paribas’ corporate social responsibility approach. Due to this one of BNP Paribas’ key challenges is to support its entire people from the moment they join the company and throughout their career within the Group. Through its importance placed on social responsibility, BNP Paribas aims to develop a committed and fair human resources policy.
BNP Paribas is a leading employer worldwide .Through its human resources policy each year it recruits thousands of staff, the company also look to develop their employees skills through out there career working with BNP Paribas.
BNP continues to recruit and remains a popular employer despite the harsh present economic environment. With 18,737 staff recruited, the commitment to hiring more than 15,000 new staff in 2012 was easily met. At the end of 2012, the group had 188,551 across 178 countries.

BNP Paribas look to develop their employee’s skills helping to increase their employability and internal mobility and is a key part of the corporate social responsibility policy. Here are some figures to support this claim.
BNP Paribas spends 3.8% of its payroll on training, more than double the 1.6% statutory minimum in France. In 2012, over 4 million hours of training were provided worldwide.
BNP Paribas’ online training programme is frequently updated and now features over 2,700 modules. In 2012, almost 240,000 modules were completed by over 66,000 staff.
With the number of employees working in the BNP Paribas group around 190,000 ranging from 170 different nationalities, meaning that there is a high need for the implementation of a policy that promotes diversity and the fight against discrimination, this policy is supported from the top of the organisation to the bottom.
Accordingly diversity is the subject of a strict and proactive policy, whose objectives have been made public. Clear rules of governance and codes of conduct that apply to every employee at all levels have been put in place to ensure the effective application of this policy.
BNP Paribas have signed a number of international agreements such as the Principles. The risk of discrimination has been identified as one of BNP Paribas risks. Below are a few statistics taken from 2012 that illustrate the diversity of the BNP Paribas group. * 68.95% of employees were working outside of France * 53% of employees were women, of which 21.3% were Senior Managers * Women made up 35.7% of the Board of Directors

* Our civic responsibility * Combating exclusion, promoting education and culture
As a participant in the local economies of the countries in which it operates, part of the groups role consists of helping to develop communities, while respecting their values and culture. This involvement is necessary in both developing countries and countries where poverty and unemployment create major inequality. As part of its civic responsibility, therefore, BNP Paribas seeks to combat exclusion and promote education and culture.
BNP Paribas has for many years been committed to combating social and financial exclusion. The Group has taken numerous initiatives around the world to support social entrepreneurship, promote financial education and provide assistance to customers at risk.
In 2012, BNP Paribas’ support for the social and solidarity-based economy amounted to over €100 million, including:
€76.5 million to support microfinance in 19 countries
€26.1 million to promote social entrepreneurship in France

Our environmental responsibility * Combating climate change
As a participant in the global economy, BNP Paribas has a role to play in protecting the environment. In accordance with this responsibility, acting to combat climate change is one of the Group’s priorities. As a result, the Group works both to reduce the negative effects and to increase the positive effects that it may have on the environment.
The fight against climate change is a major challenge. BNP Paribas invest in research through a corporate philanthropy programme.
Launched in 2011 by the BNP Paribas Foundation in collaboration with the CSR Delegation, the “Climate Initiative” — a three-year programme with an endowment of 3 million euros — supports five research projects focusing on climate change, its causal factors and its consequences.
The first of these projects, Subglacior, aims to understand the co-evolution of climate and greenhouse gas emissions through an innovative Antarctic ice core sampling project. It is supported by the CNRS, the IPSL, the LGGE and renowned scientists such as Jean Jouzel.

Advertising
“Advertising is mass media content intended to persuade audiences of readers, viewers or listeners to take action on products, services and ideas. The idea is to drive consumer behaviour in a particular way in regard to a product, service or concept.” http://www2.uncp.edu/home/acurtis/Courses/ResourcesForCourses/Advertising/AdvertisingWhatIsIt.html BNP Paribas first started its partnership with tennis in 1973. This came about after the French tennis federation asked the bank to finance the construction of the private box seats in the centre court in Roland-Garros. Since this first project BNP Paribas have continued to support tennis in a number of different capacities they sponsor professional competitions, amateur and family tournaments, and tournaments for rising stars, exhibition matches, wheelchair tennis and tennis-related community initiatives
“As we expand our business activities, tennis helps us to enhance awareness of our brand worldwide. Through creative approaches, BNP Paribas will continue to show its loyalty and genuine enthusiasm for this sport in the years to come.”
Antoine Sire, Head of Brand, Communication and Quality

On the back of their long term sponsorship of tennis BNP recently undertook an advertising campaign via social media i.e. Twitter. BNP Paribas launched its "Tweet and Shoot" campaign. The campaign allowed the bank's Twitter followers to help train tennis star Jo-Wilfred Tsonga. Followers were able to tweet to Twitter-controlled robots who hurl tennis balls at Tsonga live on the court. The campaign took place during the lead-up to the French Open. This was a good way for the bank to improve their brand awareness by using a famous sports star.