(Issue of preference shares for the SPPE)
The General Meeting, ruling under the conditions of quorum and majority required for Extraordinary General Meetings, after having taken cognizance of the Board of Directors’ report , the Auditors' special report and the report from the Contribution Auditors, subject to the adoption of the previous resolution and pursuant to the provisions of Articles L.225-129, L.225-129-2, L.225-129-4, L.225-138 and L.228-11 et seq. of the French Commercial Code:
- delegates its power to the Board of Directors for the purpose of increasing the share capital through a cash contribution of a maximum nominal amount of €608,064,070 through the issue of a maximum number of 304,032,035 preference shares with a par value of two euros, reserved for the Société de Prise de Participation de l’Etat, a limited company (société anonyme) with capital of €1,000,000 whose headquarters are located at 139, rue de Bercy, Paris 12e, registered under number 507 542 652 RCS Paris (hereafter the “SPPE”) ;
- resolves that the subscription price of the shares to be issued in accordance with the present resolution shall be equal to the arithmetic mean of the average stock market prices weighted by the daily volumes of ordinary shares on Euronext Paris over the thirty trading days preceding the date of the decision to carry out the capital increase;
- resolves to cancel shareholders’ preferential rights to the preference shares to be issued to the SPPE;
- resolves that the present resolution shall be valid for a period of 18 months as from this meeting;
- resolves that the preference shares will, as soon as they are created, be subject to all the stipulations of the Articles of Association as amended by the previous resolution;
- resolves that the Board of Directors shall have full powers, with power of subdelegation under the conditions set by law, for the purpose of implementing this resolution, in particular to set the issue price of the preference shares in compliance with the foregoing terms and to complete the amended Articles of Association in accordance with the previous resolution by setting forth therein the said issue price, to set the number of preference shares to be issued within the foregoing limit, to set the issue date of the preference shares within the aforesaid limit, to set the date of dividend entitlement, which may be retroactive, for the shares to be issued, to set the terms for the subscription and payment of the said shares and to define the Fixed Rate stated in the amended Articles of Association in accordance with the previous resolution as being equal to the average of the 5-year CMT rate (constant maturity treasury rate) over the 20 trading days preceding the date of the decision to carry out the capital increase raised by 465 basis points and to complete the Articles of Association accordingly;
- resolves that, if necessary, the Board of Directors, with power of subdelegation under the conditions set by law, may carry out all deductions from the share premium and in particular deduct the costs incurred due to the share issue, deduct the capital increase costs from the amount of the related premium and debit from this amount the sums required for the legal reserve and generally take all necessary measures and enter into all agreements to successfully complete the issue under consideration, recognise the capital increase resulting from the issue carried out by application of the present delegation, amend the corresponding Articles of Association accordingly, and more generally carry out all required acts and formalities
Presentation of the resolution
The first two resolutions concern:
- the creation of a new share category consisting of preferred shares and the resulting modification to the Bank’s Articles of Association (first resolution);
- following on from this, a capital increase through a preferred share issue (second resolution) reserved for the state-owned Société de Prise de Participation de l’Ëtat (SPPE).
These resolutions fall within the scope of the measures announced by the French Government on October 13, 2008 designed to strengthen the equity capital of banks so that they in turn may continue to finance the economy.
BNP Paribas meets the equity capital requirements imposed by the supervisor. Nevertheless, BNP Paribas intends to fulfill to the utmost extent its mission to finance the real economy in spite of difficult refinancing conditions. As a result, it has elected to be part of the initiative proposed by the government in the interests of its clients as well as of its shareholders.
Consequently, BNP Paribas has made a commitment to:
- 4% annual growth in its loan outstandings to the French economy in 2009. This includes loans to individual customers (housing and consumer credit) and corporate customers;
- respect the AFEP-MEDEF (the French business leaders association) recommendations of October 2008 regarding executive compensation. BNP Paribas announced as early as November 6, 2008 that these recommendations and those previously published on corporate governance were part of the Code to which it voluntarily adhered. BNP Paribas occupies the leading position in the corporate governance ratings published in February 2009 by Riskmetrics (specialist in risk assessment) and Capitalcom, an agency specializing in financial and extra-financial communication.
In view of the above, the Bank:
- issued on December 11, 2008 €2.55 billion in perpetual super-subordinated notes, eligible for Tier 1 capital under the first phase of the French economic stimulus plan;
- announced on January 21, 2009 that it will participate in the second phase of an equity capital increase in a similar amount of €2.55 billion. In addition to the super-subordinated debt, options include the issuance of non-voting preferred shares that constitute "Core Tier 1" but are less diluting than ordinary shares in an amount that could go as high as €5.1 billion for concomitant repayment of the super-subordinated notes subscribed during Phase One.
Subject to the adoption of the first resolution, the second resolution will be put to shareholders, following consideration of the report of the Board of Directors and the special report of the Statuory Auditors and the report of the appraiser, to approve the issuance of said preferred shares in favour of SPPE
The maximum capital increase that can be realized would therefore be limited to 304,032,035 shares, which corresponds to the legal ceiling of 25% of the total capital post-preferred share issue. If the issue amount (including premium) is €5.1 billion as anticipated (cf. the Board’s report), account must be taken of the uncertainty regarding the issue price of the preferred shares, since this can only be determined on the occasion of the use of the authorization granted by the present General Meeting of Shareholders.
All things being equal, the expectation is that after the subordinated debt issued in December 2008 has been repaid, there will be an increase of 1.0% in Core Tier 1 and 0.5% in Tier 1, the latter standing at 8.4% at January 1, 2009 (pro forma).