(AOF) – The premises of BNP Paribas in Frankfurt were raided by German police as part of the investigation into the “Cum-Ex” scandal of tax evasion, says the German business daily, Handelsblatt. About 130 prosecutors, tax investigators and police officers carried out these searches in the offices of the French bank, but also in the private homes of defendants in Hesse, North Rhine-Westphalia and Rhineland-Palatinate.
Asked about this, a spokesperson for the Cologne public prosecutor’s office confirmed to the Handelsblatt the police raid: “The measures taken are related to the Cum-Ex operations subject to the procedure as well as to the related tax avoidance models. and aim in particular to trace relevant communications in the form of e-mails and other written correspondence”.
The fraud involved banks facilitating the purchase and resale of shares owned by foreign investors on the day of the dividend payment. “The speed with which these transactions were carried out and the lack of communication between the authorities made it difficult for the tax authorities to identify the real owners of the shares” explains a communication from the European Parliament.
“This exposed authorities to fraudulent tax refund claims from foreigners who claimed to have paid tax on dividends, which they could recover as foreigners with fictitious proof of having paid dividends. ‘tax elsewhere. Often the tax authorities would refund an unpaid tax multiple times’.
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Key points
– Bank ranked 7th in the world, created in 1822 and strengthened in 1999 by the merger with Paribas;
– Net banking income of €46.26 billion generated by international financial services (34%), banking networks (35%) and investment banking (31%);
– More than 80% commitments in “rich” countries: France for 32%, Belgium & Luxembourg for 16%, Italy for 9%, other European countries for 19%, North America for 13%, Asia-Pacific for 6 %;
– Business model based on diversification in locations and businesses, synergies and cooperation between businesses, on operational innovation and for customers;
– Capital held by the Belgian State (7.7%), the Grand Duchy of Luxembourg (1%) and the employees (4.4%), with a board of directors of 13 members chaired by Jean Lamierre, Jean- Laurent Bonnafé being Managing Director;
– Financial soundness with, at the end of September 2022, a CET 1 of 12.1%, a leverage ratio of 3.9% and liquidity of €441 billion.
Challenges
– GTS 2025 plan for growth, technology and sustainability aimed at:
– 11% return on equity, annual growth of 3.5% in NBI, self-financing of transformation and investments and distribution rate of 60%, including at least 50% in dividends:
– Highest rated innovation strategy in the sector and focused on digitalization:
– internally: support for intrapreneurs (Lux Future Lab, People’sLab4Good, Bivwak),
– in the offer to customers: 4.4 million “digital” customers, leader in France in digital functionalities, world-leading platforms in government bonds, forex or swaps and in the top five European neo- banks with Hello Bank!,
– partnerships with Plug and Pay to accelerate start-ups;
– Environmental strategy aiming to become the world leader in sustainable finance (2nd worldwide in green bonds and 1st in Europe, 1st European funder of renewable energy projects) and aiming for carbon neutrality in 2050,
– by 2025, €350 billion mobilized in sustainable loans and bond issues and €300 billion in sustainable investments;
– alignment of the loan portfolio with the trajectory of the Paris agreement, including the end of coal financing in 2030 in Europe,
– funding of €4 billion for biodiversity;
– Growth potential: €2 billion in additional annual NBI through acquisitions and partnerships in innovative technologies and models (bpost bank, Floa, Kantox and Stellantis), supported by €7 billion from the sale of West Bank.
Challenges
– Change in net book assets, €79.3 at the end of September, compared to the stock market price;
-After increases of 6.9% in net banking income and 22.6% in net income in the 1st half, confidence in the medium term in the strengthening of margins brought about by the rise in rates;
– Share buyback program for €4 billion.
The negative effects of rising interest rates
The rise in interest rates normally causes an increase in bank income through the loans granted. In Europe, according to a survey conducted by S&P among 85 banking establishments, the sector expects an average increase of 18% in its net interest income. However, this new inflationary context also has undesirable effects, in particular an increase in refinancing costs. It is also accompanied by the fear of a new recession, which would then affect all the bank’s businesses, ranging from loans to asset management, whose income is correlated to market valuations. Reassuring element: the banks of the euro zone are sufficiently solid to face a deterioration of their environment.