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Bond Market News
BNP Reviewing AXA Deal with ECB; Announces 1Q25 Results
April 25, 2025
BNP Paribas is in discussions with the ECB regarding the capital treatment of its acquisition of Axa SA’s investment unit. The deal, executed through BNP’s insurance division, is under scrutiny as the ECB questions whether it should be considered an asset management transaction rather than an insurance one. The key issue is whether BNP Paribas can apply the ‘Danish Compromise’, a preferential capital treatment typically allowed for insurance-related deals. The ECB has indicated that this treatment is not intended for asset management acquisitions, potentially leading to a larger capital impact for the bank. BNP now expects the acquisition to reduce its CET1 ratio by up to 35bp, more than the 25bp initially estimated. Despite this, the bank maintains that the deal will not affect its growth plans or profitability targets. The transaction is expected to close in early-July.
BNP also announced its 1Q2025 results yesterday, with revenues for the quarter coming in at €12.96bn ($14.7bn) up 3.8% YoY and operating income at €3.9bn ($4.45bn), up 0.3% YoY. Its cost of risk was up by 4bp YoY to 33bp while its CET1 ratio came in at 12.4%.
Its bonds traded stable with its 8% Perp at 102.8, yielding 7.43%.
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