NEW YORK, NY--(Marketwire - December 1, 2010) - At the outset of the financial crisis in August, 2007, the Federal Reserve Bank encouraged the nation's four largest depository institutions to access the Discount Window. The coordinated action was intended to be a sign to the market that the facility should be used to alleviate any strains in the banking system. To supplement this program, the Federal Reserve Bank also initiated a number of facilities designed to promote stability in the marketplace. These facilities served as a mechanism to recycle liquidity during a time of heightened stress and provided an efficient manner to deal with market dislocations.
BNP Paribas sought to assist in recycling and facilitating liquidity in the unsecured market by using the Term Auction Facility (TAF). The decision to access the TAF was partially predicated, on the notion that BNP Paribas could intervene by using a small portion of its extensive collateral to avoid exacerbating market strains further. BNP Paribas used the TAF from December, 2007 through August, 2009, until market dislocations had diminished, with liquidity becoming more abundant to a broader number of market participants. It should be noted that this facility remained in place for seven more months after BNP Paribas ceased to use it.
BNP Paribas Securities Corp., in its role as one of the Primary Dealers, also sought to facilitate liquidity in the secured markets by accessing some of these programs. They utilized the Primary Dealer Credit Facility (PDCF) and Term Securities Lending Facility (TSLF) in varying degrees from March, 2008 to November, 2008. BNP Paribas Securities Corp. used these facilities until market dislocations had diminished, with liquidity becoming more abundant to a broader number of market participants. It should be noted that both of these facilities remained in place for at least a year after BNP Paribas Securities Corp. ceased to use them.
Neither BNP Paribas nor BNP Paribas Securities Corp. used any other facilities availed by the Federal Reserve during this crisis. It should be noted that the Commercial Paper Funding Facility (CPFF) was not tapped by either BNP Paribas' asset-backed commercial paper programs or its unsecured commercial paper program. BNP Paribas ranks among the best rated banks in the world and continues to closely manage its liquidity risk. It performs liquidity stress testing on a regular basis. BNP Paribas is the largest bank in the eurozone by deposits. BNP Paribas Securities Corp. is one of the Primary Dealers and also performs liquidity stress testing on a regular basis.
About BNP Paribas:
BNP Paribas (www.bnpparibas.com) is one of the six strongest banks in the world* and the largest bank in the eurozone by deposits. With a presence in more than 80 countries and more than 200,000 employees, including 160,000 in Europe, BNP Paribas is a leading European provider of financial services on a worldwide scale. It ranks highly in its three core activities: Retail Banking, Investment Solutions and Corporate & Investment Banking. In Retail Banking, the Group has four domestic markets: Belgium, France, Italy and Luxembourg. BNP Paribas is rolling out its integrated model across the Europe-Mediterranean zone and boasts a large network in the United States. BNP Paribas Personal Finance is the leader in consumer lending in Europe. In its Corporate & Investment Banking and Investment Solutions activities, BNP Paribas also enjoys top positions in Europe and solid and fast-growing businesses in Asia.
* Rated AA by Standard & Poor's i.e. 3rd rating level on a scale of 22.
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