BNP Paribas
Age: 55
Year named CFO: 2000
Number of employees: 173,188
2008 earnings: E3.0 billion ($4.2 billion)
Compensation: Undisclosed
Being chief financial officer of one of Europe’s major banks through last year’s financial crisis was a demanding job; doing that job while helping to close the acquisition of a troubled European lender was even more daunting. Yet Philippe Bordenave has met the challenge with panache, helping BNP Paribas — France’s largest bank by profits and market capitalization — emerge from the crisis with its standing and market share enhanced.
BNP Paribas was a harbinger of the credit crisis. The bank’s decision, in August 2007, to suspend withdrawals from two investment funds exposed to U.S. subprime mortgages was one of the first signs that the crunch would have global repercussions. Bordenave’s strong financial markets background — he headed the bank’s global markets division before becoming CFO — enabled him to confront the challenges head-on. BNP Paribas disclosed its limited direct exposure to the subprime market in its third-quarter results that year and alerted investors to a sharp rise in counterparty risk — a problem that would not become widely apparent until the deterioration of monoline insurers and the near collapse of Bear Stearns Cos. last year. “We were the first ones to mention that,” Bordenave says, referring to counterparty risk. “There were not many CFOs who understood what that meant.”
BNP Paribas’s relative strength enabled it to pounce last October when the Belgian and Luxembourg governments sought a buyer for Fortis, the banking and insurance group that was brought down by subprime investments and its top-of-the-market purchase of part of ABN Amro. Bordenave, who for years has screened potential acquisition targets so BNP Paribas could move quickly, led a team that inspected Fortis’s books over a weekend and reached a purchase agreement with the governments. Although that deal was blocked by minority shareholders, who claimed it undervalued Fortis, BNP Paribas held its ground and struck a broadly similar accord in March to pay €3 billion in shares for control of Fortis’s banking operations and €1.4 billion for one quarter of its insurance business; crucially, the governments agreed to take 90 percent of any losses on Fortis’s holdings of structured products. That protection, and the share-based payment — “We couldn’t afford to harm our tier-one ratio” — made the acquisition, which closed in May, attractive, Bordenave says.
Bordenave remains cautious on the banking outlook. Although U.S. banks are racing to repay government capital received under the Troubled Asset Relief Program, he has no plans to buy back the €5.1 billion in nonvoting shares that the French government bought in March. “The worst of the financial crisis is behind us,” he says. “But we are at the beginning of the economic crisis now. The recession is deepening.”
Investors appreciate Bordenave’s candor and conservative approach. “I always feel he tells me how he really feels about the environment,” says an analyst at one U.S. fund manager.
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