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CURRENT ISSUES IN CORPORATE FINANCE
BNP PARIBASSHIMA TRISNA/ANIS FADLILAH/HEICKAL PRADINANTA/ZANE BAITY/
MARTIN/ADEL AZWAR/GERALD PRAYOGO
AGENDA
• Company profile
• Money Laundering
• European banking Crisis
• CEO Salary Issue
• Conclusion
Company Profile
Money Laundering of BNP Paribas
• The allegation to BNP Paribas:
➢ Hid $30 billion in transactions
➢ Used by regional overseas banks to route transactions
Stock Price Before The Scandal
Stock Price After the Scandal
The Impact to BNP Paribas
➢ The stock price fell slightly
➢ BNP Paribas pays almost $9 billion to the U.S. regulatory authorities
➢ BNP Paribas barred from clearing any financial transactions in dollars for a year
BNP Paribas and The European Banking Crisis
How it Affects the Company ?
• 2.3 billion pounds write-down on Greek Debt
• 72% Drop in third-quarter earnings
• 7.4 billion pounds reduction in Italian debt holdings
• 1.8 billion capital shortfall• The bank's Tier 1 ratio
was 11.9% at the end of September
Dividend
Date Dividend
5/19/2010 1.5
5/20/2009 1
5/26/2008 3.35
Source : yahoo.finance.com
Asset Turnover
Date Asset Turnover
12/31/2008 0.0412
12/31/2009 0.0341
Date Net Assets Turnover
12/31/2008 3.4797
12/31/2009 2.6256
Net Fix Assets Turnover
Stock Price
Stock Price
CEO Compensation
CEO Baudouin Prot - $1.43M total computation
Objective of a Business Organization
CEO Compensation
CEO Compensation• The issues of high salary of the CEO BNP Paribas is inappropriate
because they didn’t think about the shareholders and the dividend that should be gotten by the shareholders.
• They also didn’t concern about the company financial condition which brings BNP Paribas into crisis.
• There are several rule which makes the CEO’s salary following the financial condition of its company
Conclusion
• A large banks are expected to stimulate the economy of Italy and Portugal, even still hesitant to lend money to these countries
• Macroeconomic and microeconomic situation may affect the performance of the company
• Modify corporate business ethics behind BNP Paribas should be fixed (Seeing it’s history is shrouded in Lawsuits & Controversy)
• The management of the firm should be adjusted to best fit the Priority of a firm, “shareholder wealth maximization”. (CEO compensation, needs to change)
• Unethical acts will prove beneficial in the short-term, In the long-term it might cause an end to a company. (Enron, Worldcom)
References
• http://analysisreport.morningstar.com/stock/research?t=BNP®ion=fra&culture=en-US&productcode=MLE
• http://www.ft.com/cms/s/0/9dfd3a52-060d-11e1-ad0e-00144feabdc0.html#axzz3LJUQOTcl
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