People pass the Paris headquarters of France's biggest listed bank, BNP Paribas.REGIS DUVIGNAU/Reuters
The inbound calls to Canadian banks from European lenders looking to shed assets are only going to pick up, if the results from BNP Paribas Wednesday morning are any indication.
BNP Paribas said it had a plan to shrink its business and balance sheet to generate a big improvement in capital ratios, and that means selling loans. BNP said it is only a third of the way through its plan, and already the bank's assets are down by close to 33 billion euros.
The bank's year-end balance sheets show a 19-billion euro decline in loans to customers relative to the end 2010. Other assets have also shrunk, while at the same time, the bank is stockpiling cash. Overall, the balance sheet has shrunk to 1.97 trillion euros in assets from 2-trillion euros.
While BNP has actually been increasing lending in its home countries in Europe, which will come as a big relief to euro zone policymakers concerned that shrinking banks will hammer economic growth by holding back loans, lending in the rest of the world is on a big decline.
The bank's big focus is on dropping dollar-denominated assets, which have become tougher to fund. Its U.S. dollar assets have plunged 30 per cent in just six months, and loans to customers in U.S. dollars are down $22-billion to $144-billion. Trading assets are down even more sharply, from $68-billion to $37-billion.