1. 0 Cross-Border Supervisory Cooperation - Issues and Challenges How to Please Multiple Country Supervisors Washington, DC June 7, 2006 Everett Schenk BNP Paribas, Head of North American Territory Corporate and Investment Banking Chairman, Institute of International Bankers

2. 1 BNP Paribas Globally and in the US BNP Paribas’ Response Agenda Improved Cooperation Among Regulators Globally What’s Next?

3. 2 Leading European Bank with Global Reach, Financially Strong Presence in 85 countries on the 5 continents 130,000 people worldwide, including BNL 60% outside France 12% in the United States Net Banking Income (incl BNL) FRB 22 % CIB 27 % IRFS 25 % AMS 14 % BNL 12 % French Retail 22 %* Corp & Invest Banking 27 % Int’l Retail & Financial Services 25 %* Asset Mgmt & Services 14 % BNL 12 %* Well-balanced business mix and profitability growing strongly (2005) Market Cap @ 5/2/06€70.6bn Net Banking Income (excl BNL)€21.5bn After-tax ROE (excl BNL)20.2% Net Banking Income by geography (incl BNL) France 48% Italy17% Rest of Europe16% USA13% Asia & Other 6% * Retail Banking 59%

4. 3 BNP Paribas platform in the US Consistent with Global Organization Retail Banking 742 branches in the Western United States and Hawaii 7 th biggest bank in the Western US 2 Brands Corporate and Investment Banking (CIB) Asset Management and Services Advisory & Capital Markets Financing Activities Securities Services Insurance FAMLI Duerr Private Banking Miami Asset Management FFTW Presence in New York, Chicago, Dallas, Houston, San Francisco, Los Angeles and CooperNeff Advisory 2,250 CIB Staff 12,250 Retail Staff 350 AMS Staff

5. 4 Regulatory Environment of BNPP’s US Platform Financial Holding Co Incorporating all business lines under one regulatory umbrella Home Country Regulator – Commission Bancaire (France) Primary US Regulators Federal Reserve Bank of New York, Consolidated Supervisor FDIC State Banking Departments, primarily New York Other Significant Regulators NY Stock Exchange SEC NASD Large Complex Banking Organization (LCBO), subject to Onsight regulatory supervision (6 permanent staff) Targeted, horizontal and peer review examinations CBOT NYMEX BOX

6. 5 BNP Paribas Globally and in the US BNP Paribas’ Response Agenda Improved Cooperation Among Regulators Globally What’s Next?

7. 6 Improved Productivity of Home/Host Regulatory Relations Home/Host Country Regulatory Relations have improved enormously over the past few years as bank management and regulators have made strides in improving communication, cooperation, transparency, and standardization of best practices. Communication Internal communication between a Home Office and its international network Externally - between Home Office and Home Country Regulator - between local regulated entities and their Host Country Regulators Cooperation High degree of cooperation between Host and Home Country regulators, facilitating Increased efficiency for regulators and bank staff Improved quality of examination results Minimization of unnecessary cost and burden Places a premium on comprehensive and regular internal communication between a Home Office and its foreign operations. Avoids inconsistent and varying guidance from Home/Host Regulators to the individual banking organization.

8. 7 Transparency Pro-active sharing of information with primary regulators to provide a complete understanding of business and control activities Globalization of businesses and reporting has improved information flow to all regulators Standardization of Best Practices Promoting broader application of improved operations and controls through Benchmarking of Best Practices and Horizontal Peer Reviews by Regulators, when available. Contributing to enhanced understanding of local standards by Home Regulators Improved Productivity of Home/Host Regulatory Relations

9. 8 BNP Paribas Globally and in the US BNP Paribas’ Response Agenda Improved Cooperation Among Regulators Globally What’s Next?

10. 9 BNP Paribas’ Response to the New Regulatory Environment Dedicated North American Territory Functions established U.S. Regulatory Relationship Oversight Committee Regulatory Relationship Officers covering all of Corporate and Investment Banking and Retail Banking for the U.S. Corporate Governance Committee and a process by which all Controls and Risk Indicators are reviewed Evolution of U.S. Staff Interfacing with the Primary Regulators in the U.S. (Corporate and Investment Banking)

11. 10 Dedicated Global Functions Establishment of a Head Office Regulatory Coordinator for all business lines Reinforcement of the Global Head of Compliance role in Paris Creation of a Globally Centralized Regulatory Relationship Function that oversees the 11 main international territories for action plans, regulatory communications and review of operational controls Communication Weekly meeting held between Regulator Relationship Officer and onsite Regulators for status updates Monthly meetings with the U.S. Regulatory Relationship Oversight Committee to discuss exams, findings and implementation. Participants include Legal, Compliance, Audit, external Counsel and Head Office Management Semi-Annual meetings between primary U.S. Regulators and BNP Paribas Management (local and global). Alternative meeting locations between New York and Paris Creation of a Global Regulatory Relationship Function allows BNP Paribas to communicate effectively to all International Regulators. BNP Paribas’ Response to the New Regulatory Environment

12. 11 BNP Paribas’ Response to the New Regulatory Environment Addressing Findings/Recommendations Dedicated Internal staff to follow up and help resolve Regulatory and Internal Audit Findings Disciplined process for identification of aged or unresolved Findings are analyzed and escalated to Senior Management, Locally and Head Office

13. 12 BNP Paribas Globally and in the US BNP Paribas’ Response Agenda Improved Cooperation Among Regulators Globally What’s Next?

14. 13 What’s Next Develop concrete methods of sharing responsibilities that will produce substantial savings in aggregate supervisory man hours and in amount of management and employee time needed by banks to satisfy various home/host regulators. Support Chairman Bernanke’s recent call, which was in connection with Basel II implementation, for flexibility among supervisors to ensure appropriate standardization of requirements is combined with flexible accommodation of differing approaches by different institutions that achieve consistent results Basel II Capital Standards – Encourage the Accord Implementation Group to avoid duplication of validation requirements by home/host regulators

15. 14 Recommend increased reliance on home country data and reporting and supervisory analysis Unless specifically needed to satisfy host country safety and soundness responsibilities. Particularly essential in wholesale markets where the risks being measured are cross border and global in their effects. Support further coordination between home/host regulators regarding examinations and on-site oversight. Proven efficiencies from joint exams currently conducted by multiple domestic regulators with the US Home/host regulators who share common standards should be especially well equipped to combine their efforts. What’s Next

16. 15 How to Please Multiple Country Supervisors Everett Schenk BNP Paribas, Head of North American Territory Corporate and Investment Banking Chairman, Institute of International Bankers