Scope Ratings has today changed to Stable from Negative the outlook for BNP Paribas SA’s A+ Issuer Credit Strength Rating (ICSR) and senior unsecured debt ratings. The outlook on BNP Paribas’s additional Tier 1 (AT1) securities was also moved to Stable from Negative (see details at the end of this press release). BNP Paribas SA’s S-1 short-term ratings and their Stable Outlook were not changed.

On 2 July 2014, Scope had downgraded the long-term ratings of BNP Paribas from AA- to A+ following the announcement of a comprehensive legal and financial settlement regarding the review of certain USD transactions of BNP Paribas by US authorities. The negative outlook was based on Scope’s concerns regarding the impact of the settlement on the reputation and track record of the banking group. With the change of BNP Paribas’s outlook to Stable from Negative, Scope is confident that these concerns have materially abated.

Indeed, the US settlement has had, in Scope’s opinion, little to no impact on the franchise strength of BNP Paribas. Considering that the negative publicity regarding a settlement with the US authorities started for good on 30 April 2014, revenue trends at BNP Paribas between Q2 2014 and Q2 2015 remained extremely resilient – in particular for the bank’s franchises that are the most exposed to the US, i.e. BancWest, Corporate Banking & Global Markets.

In addition, Scope’s outlook change back to Stable is underpinned by the implementation by BNP Paribas of comprehensive new compliance and control procedures, particularly in the US. Moreover, the use of a third-party bank to execute the USD clearing of some of the bank’s operations in the course of 2015 does not seem to have had any material impact on the financials of the French group, nor on its franchise. Eventually, all the USD flows of BNP Paribas will ultimately be processed and controlled via the bank’s New York branch.

Lastly, to support our change of outlook, Scope noted that last April the US Department of Labor granted BNP Paribas the ability to continue to manage US pension funds, under increased auditing and controlling conditions, therefore reducing even further the risk of franchise damage at BNP Paribas.

Scope concluded by noting that BNP Paribas’s A+ ratings reflect the very strong fundamentals of the group, its well-rounded business model, its ample cash generation and its solid market positions in key geographies and activities.

The outlook of the following ratings was changed to Stable from Negative:

Issuer credit-strength rating (ICSR) of A+, outlook changed to Stable from Negative (BNP Paribas SA).
Senior unsecured debt ratings of A+, outlook changed to Stable from Negative (BNP Paribas SA).
AT1 securities ratings of BBB, outlook changed to Stable from Negative (BNP Paribas SA).

BNP Paribas SA’s S-1 short-term ratings and their stable outlooks were not changed.