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6th November 2012

Bancassurer Basel III workaround

Cardif, the insurer owned by BNP Paribas is to lend to companies with the loans selected by Christian Dargnat, head of BNP Paribas Asset Management. Using this method reduces the bank capital requirements under Basel III. The initial phase is for a modest, €280m (£224m $360m ¥29.0bn Y2,246m) investment by Cardiff with a target Euribor + 350bp investment.

Life Assurers and banks have always worked together for certain investments. Both Crédit Agricole and Société Générale have arrangements with AXA. The difference with the Cardif / BNP deal is that Cardif is a wholly owned subsidiary and the investments are chosen by the bank with no hiding the fact that a large part of the motivation is the bank capital ratios, as opposed to the insurer selecting the investments to maximise its investment return.