Risk Analysis
Autor: Zephyr Li • October 9, 2016 • Coursework • 1,522 Words (7 Pages) • 905 Views
4. Risk analysis
In this section, it will compare BNP Paribas with its competitors to briefly discuss the risk main risk that BNP Paribas faced in recent years. In order to keep the consistence of context, the following content will use the same competitors and source of data.
4.1 Capital risk
The capital risk is caused by the insolvency when banks cannot use the current capital to cover its possible future losses.
Basal III 2015 | BNP Paribas | Crédit Agricole Group | Société Générale |
Tier1 capital | 76854.0 | 77760.0 | 48112.0 |
Total regulatory capital | 85920.0 | 98254.0 | 58134.0 |
Ratio requirement | |||
CET1 | 11.0% | 13.5% | 10.9% |
Tier1 | 12.2% | 15.3% | 13.5% |
Total capital | 13.6% | 19.3% | 16.3% |
Source: three banks annual report in 2015
From the table above, it can be seen that in 2015, BNP with a phased in CET1 ratio of 11.0%, Tier1 ratio of 12.2%, and total capital ratio of 13.6% respectively. Compared those figures with competitors, the BNP’s figures are relative low. As we can see, one-year figures is not enough to discuss the total trend. In 2014, Basal III had changed constitution of risk-weighted assets and raising minimum requirements of some ratios began to put into effect, while Basel II affected from 2006 to 2013. So the following discussion will be in two time periods.
Basal III 2014 | BNP Paribas | Crédit Agricole Group | Société Générale |
Ratio requirement | |||
CET1 | 10.4% | 10.4% | 10.1% |
Tier1 | 11.5% | 11.8% | 12.6% |
Total capital | 12.6% | 16.1% | 14.3% |
Source: three banks annual report in 2014
[pic 1]
Source: three banks annual report from 2014 to 2015
[pic 2]
[pic 3]
Source: three banks annual report from 2006 to 2013
From the table and graphs above, it shows the trend of total capital ratios of three banks. Also, BNP’s figures were relative low in recent three years, which were keep stable around 14%. However, since 2010, the main competitors’ ratios were growing stable and surpassed the BNP in 2013, while BNP dropped dramatically in 2013. So it could be reckoned that BNP has relative a highest capital risk in recent years.
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