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&region=fra&culture=en-US&productcode=MLE

• http://www.ft.com/cms/s/0/9dfd3a52-060d-11e1-ad0e-00144feabdc0.html#axzz3LJUQOTcl