BNP Paribas traces its origin to the Comptoir National d'Escompte de Paris (Paris National Discount Centre) in 1848, created by decree of the 2nd Republic, to restore banking facilities disrupted by the economic crisis which accompanied the French Revolution. The initial capitalization of the new company was provided by company's partners, municpal bonds issued by Paris itself, and Treasury bills. In 1853 the CNEP renamed itself to the Comptoir d'Escompte de Paris (CEP) and diversified from discounting commercial paper into variable and fixed interest instruments.

In 1860, France and England signed an agreement to reduce protectionism and the CEP began to expand. It opened a branch in Shanghai to collect money owed to France by China, and to facilitate trade in silk and tea, as to provide local banking facilities to French exporters. It was not until 1867 however that a branch office opened in France.

Meanwhile, Banque de Paris et des Pays-Bas (Bank of Paris and the Netherlands) was founded in 1872 as a merger between Banque de Paris and Banque de Credit et de Depots des Pays-Bas. It had branches in Paris, Amsterdam, Geneva and Brussels. Its first major transactions were as the lead manager in the issue of loans for the payment of war indemnity owed by France to Germany.

In 1887, the viability of the CEP was threatened by bad loans, leaving it unable to honour withdrawals. The French central bank intervened, effectively liquidating the CEP and re-establishing it under its original name, the CNEP. The bank was well positioned to profit from the industrial revolution, dealing in equities, underwriting IPOs, and extending lines of credit. As part of this expansion, the CNEP opened more branches overseas, in New York and Boston. This enabled French investors to trade in foreign securities, much as American investors trade ADRs today. At the same time, the BPPB issued and traded Treasury bills and Government securities in France, and operated as a commercial bank, financing industrial activity. In addition, it built up an equity portfolio and adopted a strategy of making long-term investments in key industries, such as chemicals, petroleum, and steel.

As a result of the Great Depression, Banque Nationale de Credit (BNC) was liquidated in 1932 and a new bank created, the Banque Nationale port le Commerce et l'Industrie (BNCI). This took over the operations of the former BNC. BNCI adopted bureacratic business processes that were radical at the time, centralizing adminstrative operations, enabling it to process transactions with unprecendented efficiency. From 1937, BNCI began acquiring smaller banks, with a grand total of 10 billion Francs on deposit by 1940. Even though operations in France suffered under German occupation, BNCI expanded overseas including Algeria, the Middle East and the West Indies.

After the second world war, the French government nationalized the major retail banks, CNEP, BNCI, Credit Lyonnais and Societe General, and took control of the Banque de France, the central bank. These banks were now under the direct control of the state, which intended to use them to finance reconstruction, and to process foreign trade transactions. The following year, a private company, the Union Financiere d'Enterprises Francais et Etrangeres {Financial Union of French and Foreign Companies) was created to finance import of raw materials by writing loans to manufacturers. In 1950, this merger with Banque Francaise d'Acceptation to form Union Francaise des Banques (French Union of Banks). UFB created 3 business units for mortgage loans, long term real estate loans and consumer credit. In 1959, the operating companies of UFB merged into Compagnie Bancaire, which floated on the Paris stock exchange in 1961, and in 1969 it merged with Groupe Paribas to form Paribas. In 1982 it was nationalized, then in 1986 it was privatized with 3.8 million individual shareholders.

BNCI and CNEP formally merged in 1966 to form the Banque Nationale de Paris. It continued to expand throughout the 1970s, creating the banking consortium ABECOR and acquiring the Bank of the West in the US, merging it with French Bank of California. In 1993, BNP was also privatized, and focused its activites on domestic retail banking and international wholesale banking. In 1997, Banque Paribas sold its subsidiaries in Belgium and the Netherlands.

In 1999, Paribas and Societe Generale announced intentions to merge. BNP responded by launching takeover bids on them both! BNP managed to acquire 37% of SG and 65% of Paribas. This led to to creation of the BNP Paribas which exists today, operating in 83 countries with 77,000 employees.

and you thought banking was dull...

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