Bond BNP Paribas SA 2.875% ( XS1046827405 ) in EUR

BNP Paribas SA

100 % ▼

France

XS1046827405 ( in EUR )

2.875% per year ( payment 1 time a year)

19/03/2026

Prospectus brochure of the bond BNP Paribas XS1046827405 en EUR 2.875%, maturity 19/03/2026

100 000 EUR

1 500 000 000 EUR

20/03/2026 ( In 136 days )

BNP Paribas is a leading international banking group providing a wide range of financial services including retail banking, investment banking, asset management, and corporate and institutional banking to individuals, businesses, and governments worldwide.

BNP Paribas issued a ?1,500,000,000 bond (ISIN: XS1046827405) in EUR, maturing on March 19, 2026, with a 2.875% coupon rate, a minimum trading size of ?100,000, and currently trading at 100%.

Prospectus dated 18 March 2014

BNP PARIBAS
(incorporated in France)

Series No: 16590
Tranche: 1
Issue of 1,500,000,000 Fixed to Fixed Reset Rate
Subordinated Tier 2 Notes due 20 March 2026
Under the 90,000,000,000
EURO MEDIUM TERM NOTE PROGRAMME

The 1,500,000,000 Fixed to Fixed Reset Rate Subordinated Tier 2 Notes (the "Notes") will be issued by BNP Paribas ("BNPP", the "Issuer" or the
"Bank") on 20 March 2014 (the "Issue Date") under its 90,000,000,000 Euro Medium Tern Note Programme (the "Programme"). The principal of the
Notes will constitute direct, unconditional, unsecured and subordinated obligations of the Issuer, as described in Condition 4 (Status of the Notes) in
"Terms and Conditions of the Notes". The relative Coupons will not be subordinated.
The Notes are subordinated notes of the Issuer issued pursuant to the provisions of Article L. 228-97 of the French Code de Commerce.
The Notes shall bear interest at the applicable Rate of Interest from (and including) the Issue Date and interest shall be payable annually in arrear on 20
March in each year commencing on 20 March 2015. The amount of interest per Calculation Amount payable on each interest payment date in relation to
an Interest Period falling in the period from (and including) the Issue Date to (but excluding) 20 March 2021 (the "Reset Date") will be EUR 28.75. The rate
of interest for each Interest Period occurring after the Reset Date will be equal to the Reset Rate of Interest, as determined by the Calculation Agent, as
described in "Terms and Conditions of the Notes".
This document (the "Prospectus") constitutes a prospectus for the purposes of Article 5.3 of Directive 2003/71/EC of 4 November 2003 (the "Prospectus
Directive") as amended.
Unless previously redeemed or purchased and cancelled, the Notes will be redeemed on 20 March 2026 (the "Maturity Date") at their principal amount.
The Issuer may, subject to the prior approval of the Secrétariat général de l'Autorité de contrôle prudentiel et de résolution, redeem the Notes in whole, but
not in part, at their principal amount, together with all interest accrued to the date fixed for redemption on the Optional Redemption Date (Call) or upon the
occurrence of a Capital Event, a Withholding Tax Event, a Tax Deduction Event or a Gross-Up Event (each term as defined in "Terms and Conditions of
the Notes").
The Notes are governed by English law except Condition 4 (Status of the Notes) which is governed by French law. The Notes will be in bearer form and in
the denominations of EUR 100,000 and integral multiples of EUR 1,000 in excess thereof up to and including EUR 199,000. The Notes will initially be
represented by a temporary global note (the "Temporary Global Note"), without interest coupons, which will be deposited on or about the Issue Date with
a common depositary for Euroclear Bank SA/NV ("Euroclear") and Clearstream Banking, société anonyme ("Clearstream, Luxembourg"). Interests in
the Temporary Global Note will be exchangeable for interests in a permanent global note (the "Permanent Global Note" and, together with the Temporary
Global Note, the "Global Notes"), without interest coupons, on or after 29 April 2014, upon certification as to non-U.S. beneficial ownership. Interests in
the Permanent Global Note will be exchangeable for definitive Notes only in certain limited circumstances - see "Overview of Provisions relating to the
Notes while represented by the Global Notes".
Application has been made to the Autorité des marchés financiers (the "AMF") in France for approval of this Prospectus in its capacity as competent
authority pursuant to Article 212-2 of its Règlement Général which implements the Prospectus Directive on the prospectus to be published when securities
are offered to the public or admitted to trading in France.
Application has been made for the Notes to be admitted to trading on Euronext Paris. Euronext Paris is a regulated market for the purposes of the Markets
in Financial Instruments Directive 2004/39/EC. Such admission to trading is expected to occur as of the Issue Date or as soon as practicable thereafter.
The Notes have been rated A- by Standard & Poor's Credit Market Services France SAS ("Standard & Poor's"), Baa3 by Moody's Investors Service Ltd.
("Moody's") and A by Fitch France S.A.S. ("Fitch France"). The Issuer's long-term credit ratings are A+ with a negative outlook (Standard & Poor's), A2
with a stable outlook (Moody's) and A+ with a stable outlook (Fitch France). Each of Standard & Poor's, Moody's and Fitch France is established in the
European Union and is registered under the Regulation (EC) No. 1060/2009 (as amended) (the "CRA Regulation"). As such each of Standard & Poor's,
Moody's and Fitch France is included in the list of credit rating agencies published by the European Securities and Markets Authority on its website (at
http://www.esma.europa.eu/page/List-registered-and-certified-CRAs) in accordance with the CRA Regulation. A security rating is not a recommendation to
buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time.
Copies of this Prospectus will be available (a) free of charge from the head office of the Issuer at the address given at the end of this Prospectus and (b) on
the websites of the AMF (www.amf-france.org) and of the Issuer (www.invest.bnpparibas.com).

An investment in the Notes involves certain risks. Prospective purchasers of the Notes should ensure that they understand the nature of the
Notes and the extent of their exposure to risks and that they consider the suitability of the Notes as an investment in the light of their own
circumstances and financial condition. For a discussion of these risks see "Risk Factors" below.
Global Coordinator and Structuring Advisor
BNP PARIBAS

Joint Lead Manager and Sole Bookrunner
BNP Paribas UK Limited

Joint Lead Managers
Danske Bank
ING
Natixis
Standard Chartered Bank
UBS

2

This Prospectus is to be read in conjunction with al documents which are incorporated herein by
reference as described in "Documents Incorporated by Reference" below. This Prospectus shal be
read and construed on the basis that such documents are so incorporated and form part of this
Prospectus.
The Managers (as defined in "Subscription and Sale" below) have not separately verified the
information contained herein. Accordingly, no representation, warranty or undertaking, express or
implied, is made and no responsibility is accepted by the Managers as to the accuracy or
completeness of the information contained in this Prospectus or any other information provided by the
Issuer in connection with the Notes. The Managers accept no liability in relation to the information
contained in this Prospectus or any other information provided by the Issuer in connection with the
Notes.
No person has been authorised to give any information or to make any representation not contained
in or not consistent with this Prospectus or any further information supplied in connection with the
Notes and, if given or made, such information or representation must not be relied upon as having
been authorised by the Issuer or any of the Managers.
In connection with the issue and sale of Notes, neither the Issuer nor its affiliates wil , unless agreed
to the contrary in writing, act as a financial adviser to any Noteholder.
Neither this Prospectus nor any other information supplied in connection with the Notes is intended to
provide the basis of any credit or other evaluation and should not be considered as recommendations
by the Issuer or any of the Managers that any recipient of this Prospectus or any other information
supplied in connection with the Notes should purchase the Notes. Each investor contemplating
purchasing the Notes should make its own independent investigation of the financial condition and
affairs, and its own appraisal of the creditworthiness, of the Issuer. Neither this Prospectus nor any
other information supplied in connection with the Notes constitutes an offer or invitation by or on
behalf of the Issuer or any of the Managers to any person to subscribe for or to purchase the Notes.
The delivery of this Prospectus does not at any time imply that the information contained herein
concerning the Issuer is correct at any time subsequent to the date of this Prospectus or that any
other information supplied in connection with the Notes is correct as of any time subsequent to the
date indicated in the document containing the same. The Managers expressly do not undertake to
review the financial condition or affairs of the Issuer during the life of the Notes. Prospective investors
should review, inter alia, the most recently published audited annual consolidated financial
statements, unaudited semi-annual interim consolidated financial statements and quarterly financial
results of the Issuer, when deciding whether or not to purchase the Notes.
This Prospectus does not constitute, and may not be used for or in connection with, an offer to any
person to whom it is unlawful to make such offer or a solicitation by anyone not authorised so to act.
The distribution of this Prospectus and the offer or sale of the Notes may be restricted by law in
certain jurisdictions. Persons into whose possession this Prospectus or Notes come must inform
themselves about, and observe, any such restrictions. In particular, there are restrictions on the
distribution of this Prospectus and the offer or sale of the Notes in the European Economic Area
("EEA") (and certain member states thereof) and the United States (see "Subscription and Sale"
below).
The Notes have not been and wil not be registered under the United States Securities Act of 1933, as
amended (the "Securities Act"), or with any securities regulatory authority of any state or jurisdiction
of the United States, and the Notes are subject to U.S. tax law requirements. Subject to certain
exceptions, Notes may not be offered, sold or delivered within the United States or to, or for the
account or benefit of, U.S. persons, as defined in Regulation S under the Securities Act ("Regulation
S") (see "Subscription and Sale" below).
This Prospectus has been prepared on the basis that any offer of Notes in any Member State of the
European Economic Area which has implemented the Prospectus Directive (each, a "Relevant
Member State") wil be made pursuant to an exemption under the Prospectus Directive, as
implemented in that Relevant Member State, from the requirement to publish a prospectus for offers
of Notes. Accordingly any person making or intending to make an offer in that Relevant Member
State of Notes which are the subject of an offering contemplated in this Prospectus in relation to the

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offer of those Notes may only do so in circumstances in which no obligation arises for the Issuer or
any Manager to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement
a prospectus pursuant to Article 16 of the Prospectus Directive, in each case, in relation to such offer.
Neither the Issuer nor any Manager have authorised, nor do they authorise, the making of any offer of
Notes in circumstances in which an obligation arises for the Issuer or any Manager to publish or
supplement a prospectus for such offer.
This Prospectus does not constitute an offer to sell or the solicitation of an offer to buy any Notes in
any jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such
jurisdiction. The distribution of this Prospectus and the offer or sale of Notes may be restricted by law
in certain jurisdictions. The Issuer and/or the Managers do not represent that this Prospectus may be
lawfully distributed, or that Notes may be lawful y offered, in compliance with any applicable
registration or other requirements in any such jurisdiction, or pursuant to an exemption available
thereunder, or assume any responsibility for facilitating any such distribution or offering. In particular,
no action has been taken by the Issuer and/or the Managers which is intended to permit a public
offering of Notes or distribution of this Prospectus in any jurisdiction where action for that purpose is
required. Accordingly, no Notes may be offered or sold, directly or indirectly, and neither this
Prospectus nor any advertisement or other offering material may be distributed or published in any
jurisdiction, except under circumstances that wil result in compliance with any applicable laws and
regulations. Persons into whose possession this Prospectus or Notes may come must inform
themselves about, and observe, any such restrictions on the distribution of this Prospectus and the
offering and sale of Notes. In particular, there are restrictions on the distribution of this Prospectus
and the offer or sale of Notes in the United States and the European Economic Area (including
France and the United Kingdom), see "Subscription and Sale" below.
IN CONNECTION WITH THE ISSUE OF THE NOTES, BNP PARIBAS UK LIMITED AS
STABILISING MANAGER (THE "STABILISING MANAGER") (OR PERSONS ACTING ON BEHALF
OF ANY STABILISING MANAGER) MAY OVER-ALLOT NOTES OR EFFECT TRANSACTIONS
WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE NOTES AT A LEVEL HIGHER
THAN THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER, THERE IS NO ASSURANCE
THAT THE STABILISING MANAGER (OR PERSONS ACTING ON BEHALF OF A STABILISING
MANAGER) WILL UNDERTAKE STABILISATION ACTION. ANY STABILISATION ACTION MAY
BEGIN ON OR AFTER THE DATE ON WHICH ADEQUATE PUBLIC DISCLOSURE OF FINAL
TERMS OF THE OFFER OF THE NOTES IS MADE AND, IF BEGUN, MAY BE ENDED AT ANY
TIME, BUT IT MUST END NO LATER THAN THE EARLIER OF THIRTY (30) DAYS AFTER THE
ISSUE DATE OF THE NOTES AND SIXTY (60) DAYS AFTER THE DATE OF THE ALLOTMENT
OF THE NOTES. ANY STABILISATION ACTION OR OVER-ALLOTMENT SHALL BE
CONDUCTED IN ACCORDANCE WITH ALL APPLICABLE LAWS AND RULES.
In this Prospectus, references to "euro", "EURO", "Euro", "EUR" and "" refer to the currency
introduced at the start of the third stage of European economic and monetary union pursuant to the
Treaty on the Functioning of the European Union and as amended by the Treaty of Amsterdam.
FORWARD-LOOKING STATEMENTS
The 2012 Registration Document and the 2013 French Registration Document (as defined below)
contain forward-looking statements. BNP Paribas and the BNP Paribas Group (being BNP Paribas
together with its consolidated subsidiaries, the "Group") may also make forward-looking statements in
their audited annual financial statements, in their interim financial statements, in their offering
circulars, in press releases and other written materials and in oral statements made by their officers,
directors or employees to third parties. Statements that are not historical facts, including statements
about the Issuer's and/or Group's beliefs and expectations, are forward-looking statements. These
statements are based on current plans, estimates and projections, and therefore undue reliance
should not be placed on them. Forward-looking statements speak only as of the date they are made,
and the Issuer and the Group undertake no obligation to update publicly any of them in light of new
information or future events.
PRESENTATION OF FINANCIAL INFORMATION
Most of the financial data presented or incorporated by reference in this Prospectus is presented in
euros.

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BNP Paribas consolidated financial statements for the years ended 31 December 2013 and
31 December 2012 have been prepared in accordance with international financial reporting standards
("IFRS") as adopted by the European Union. The Group's fiscal year ends on 31 December and
references in the 2013 French Registration Document and 2012 Registration Document (both as
defined below) to any specific fiscal year are to the twelve-month period ended 31 December of such
year.
Due to rounding, the numbers presented or incorporated by reference throughout this Prospectus, the
2013 French Registration Document or the 2012 Registration Document (both as defined below) may
not add up precisely, and percentages may not reflect precisely absolute figures.

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Table of Contents

Risk Factors ............................................................................................................................................ 7
General Description of the Notes .......................................................................................................... 25
Documents Incorporated by Reference ................................................................................................ 29
Terms and Conditions of the Notes ...................................................................................................... 33
Overview of Provisions relating to the Notes while in Global Form ...................................................... 45
Description of the Issuer ....................................................................................................................... 47
Use of Proceeds .................................................................................................................................... 48
Taxation................................................................................................................................................. 49
Subscription and Sale ........................................................................................................................... 52
General Information .............................................................................................................................. 53

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RISK FACTORS
Prospective purchasers of Notes should carefully consider the following information in
conjunction with the other information contained in this Prospectus (including the documents
incorporated by reference see "Documents Incorporated by Reference" below) before
purchasing Notes.
In purchasing Notes, investors assume the risk that the Issuer may become insolvent or otherwise be
unable to make all payments due in respect of the Notes. There is a wide range of factors which
individually or together could result in the Issuer becoming unable to make all payments due in
respect of the Notes. It is not possible to identify all such factors or to determine which factors are
most likely to occur, as the Issuer may not be aware of all relevant factors and certain factors which it
currently deems not to be material may become material as a result of the occurrence of events
outside the Issuer's control. The Issuer has identified in the 2013 French Registration Document
incorporated by reference herein a number of factors which could materially adversely affect its
business and ability to make payments due under the Notes.
In addition, factors which are material for the purpose of assessing the market risks associated with
the Notes are also described below.
Prospective investors should also read the detailed information set out elsewhere in this Prospectus
and reach their own views prior to making any investment decision.
Terms used in this section and not otherwise defined have the meanings given to them in the Terms
and Conditions of the Notes.
Risks Relating to the Issuer and its Industry
See the Chapter 5 ("Risks and Capital Adequacy") contained on pages 227 to 336 of the 2013 French
Registration Document (as defined below) which is incorporated by reference in this Prospectus.
Macro-economic environment
Market and macroeconomic conditions affect the Bank's results. The nature of the Bank's business
makes it particularly sensitive to market and macroeconomic conditions in Europe, which have been
difficult and volatile in recent years.
In 2013, the global economy began to move towards equilibrium, with several emerging countries
slowing down and a slight recovery in the developed countries. In 2013, global economic conditions
remained generally stable as compared to 2012. IMF and OECD economic forecasts1 for 2014
generally indicate a renewal of moderate growth in developed economies albeit less strong and
uniform in the Euro-Zone. Their analysts consider that uncertainties remain regarding the strength of
the recovery, particularly in light of the U. S. Federal Reserve's announcement in December 2013 that
it would gradual y reduce ("taper") its stimulus program, and in the Euro-zone, where a risk of deflation
exists.
Within the Euro-zone, sovereign credit spreads continued to decrease in 2013 following the decrease
recorded in 2012 from the previous historically high levels. The financial condition of certain
sovereigns has markedly improved but there remains uncertainty as to the solvency of some others.
Laws and Regulations applicable to Financial Institutions
Laws and regulations applicable to financial institutions that have an impact on the Bank have
significantly evolved in the wake of the global financial crisis. The measures that have been proposed
and/or adopted in recent years include more stringent capital and liquidity requirements (particularly
for large global banking groups such as the Bank), taxes on financial transactions, restrictions and
taxes on employee compensation, limits on the types of activities that commercial banks can
undertake and ring-fencing or even prohibition of certain activities considered as speculative within
separate subsidiaries, restrictions on certain types of financial products, increased internal control and
reporting requirements, more stringent conduct of business rules, mandatory clearing and reporting of
derivative transactions, requirements to mitigate risks in relation to over-the-counter derivative

1 See in particular : IMF World Economic Outlook Update January 2014 and G20 Note on Global Prospects and Policy
Challenges February 2014; OECD The Global Economic Outlook November 2013.

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transactions and the creation of new and strengthened regulatory bodies. The measures that were
recently adopted, or in some cases proposed and still under discussion, that have or are likely to
affect the Bank, include in particular the French Ordinance of June 27, 2013 relating to credit
institutions and financing companies ("Sociétés de financement"), which came into force on January
1, 2014 and the French banking law of July 26, 2013 on the separation and regulation of banking
activities and the Ordinance of February 20, 2014 for the adaptation of French law to EU law with
respect to financial matters; the EU Directive and Regulation on prudential requirements "CRD IV"
dated June 26, 2013 and many of whose provisions have been applicable since January 1, 2014; the
proposals of technical regulatory and execution rules relating to the Directive and Regulation CRD IV
published by the EBA; the designation of the Bank as a systemically important financial institution by
the FSB; the public consultation for the reform of the structure of the EU banking sector of 2013 and
the European Commission's proposed regulation on structural measures designed to improve the
strength of EU credit institutions of January 29, 2014; the proposal for a regulation on indices used as
benchmarks in financial instruments and financial contracts; the European single supervisory
mechanism; the European proposal for a single resolution mechanism and the proposal for a
European Directive on bank recovery and resolution; the final rule for the regulation of foreign banks
imposing certain liquidity, capital and other prudential requirements adopted by the U.S. Federal
Reserve; the proposal of the U.S. Federal Reserve relating to liquidity ratios of large banks; and the
"Volcker" Rule imposing certain restrictions on investments in or sponsorship of hedge funds and
private equity funds and proprietary trading activities (of U.S. banks and to some extent non-U.S.
banks) that was recently adopted by the U.S. regulatory authorities. More generally, regulators and
legislators in any country may, at any time, implement new or different measures that could have a
significant impact on the financial system in general or the Bank in particular.
Risks Related to the Bank and its Industry
Difficult market and economic conditions could have a material adverse effect on the operating
environment for financial institutions and hence on the Bank's financial condition, results of operations
and cost of risk.
As a global financial institution, the Bank's businesses are highly sensitive to changes in financial
markets and economic conditions generally in Europe, the United States and elsewhere around the
world. In recent years, the Bank has been, and may again in the future be, confronted with a
significant deterioration of market and economic conditions resulting, among other things, from crises
affecting sovereign debt, the capital markets, credit or liquidity, regional or global recessions, sharp
fluctuations in commodity prices, currency exchange rates or interest rates, volatility in prices of
financial derivatives, inflation or deflation, restructurings or defaults, corporate or sovereign debt rating
downgrades or adverse political and geopolitical events (such as natural disasters, societal unrest,
acts of terrorism and military conflicts). Such disruptions, which may develop quickly and hence not
be fully hedged, could affect the operating environment for financial institutions for short or extended
periods and have a material adverse effect on the Bank's financial condition, results of operations or
cost of risk. In 2014, the global macro-economic environment will be particularly sensitive to the
expected slowdown (or "tapering") of government stimulus programs, including that of the United
States. In Europe, the economic growth perspectives differ among member states and a risk of
deflation exists.
Moreover, a resurgence of a sovereign debt crisis in certain countries remains possible. For example,
European markets have experienced significant disruptions in recent years as a result of concerns
regarding the ability of certain countries in the Euro-zone to refinance their debt obligations. At several
points in recent years these disruptions caused tightened credit markets, increased volatility in the
exchange rate of the euro against other major currencies, affected the levels of stock market indices
and created uncertainty regarding the economic prospects of certain countries in the European Union
as well as the quality of bank loans to sovereign debtors in the European Union. The Bank holds and
in the future may hold substantial portfolios of sovereign obligations issued by the governments of,
and has and may in the future have substantial amounts of loans outstanding to borrowers in, certain
of the countries that have been most significantly affected by the crisis in recent years. The Bank also
participates in the interbank financial market and as a result, is indirectly exposed to risks relating to
the sovereign debt held by the financial institutions with which it does business. More generally, the
sovereign debt crisis had, and could again in the future have, an indirect impact on financial markets

8

and, increasingly, economies, in Europe and worldwide, and more generally on the environment in
which the Bank operates.
If economic conditions in Europe or in other parts of the world were to deteriorate, particularly in the
context of a resurgence of the sovereign debt crisis (such as a sovereign default), the Bank could be
required to record impairment charges on its sovereign debt holdings or record losses on sales
thereof, and the resulting market and political disruptions could have a significant adverse impact on
the credit quality of the Bank's customers and financial institution counterparties, on market
parameters such as interest rates, currency exchange rates and stock market indices, and on the
Bank's liquidity and ability to raise financing on acceptable terms.
Legislative action and regulatory measures taken in response to the global financial crisis may
materially impact the Bank and the financial and economic environment in which it operates.
In recent periods, laws and regulations have been enacted or proposed, in France, Europe and the
United Sates, in particular, with a view to introducing a number of changes, some permanent, in the
financial environment. The impact of the new measures could be to change substantially the
environment in which the Bank and other financial institutions operate. The new measures that have
been or may be proposed and adopted include more stringent capital and liquidity requirements
(particularly for large global banking groups such as the Bank), taxes on financial transactions,
restrictions and increased taxes on employee compensation over specified levels, restrictions or
prohibitions on certain types of activities considered as speculative undertaken by commercial banks
that will need to be ring-fenced in subsidiaries (particularly proprietary trading), restrictions or
prohibitions on certain types of financial products or activities, increased internal control and reporting
requirements with respect to certain activities, more stringent conduct of business rules, increased
regulation of certain types of financial products including mandatory reporting of derivative
transactions, requirements either to mandatorily clear, or otherwise mitigate risks in relation to, over-
the-counter derivative transactions, and the creation of new and strengthened regulatory bodies.
Certain measures have been adopted are already applicable to the Bank, such as the EU Directive
and Regulation on prudential requirements "CRD / CRR IV" dated June 26, 2013, many of whose
provisions took effect as of January 1, 2014. Moreover, the prudential ratio requirements announced
by the European Banking Authority and the designation of the Bank as a systemically important
financial institution by the Financial Stability Board increase the Bank's prudential requirements and
may limit its ability to extend credit or to hold certain assets, particularly those with longer maturities.
The Bank implemented an adaptation plan in response to these requirements, including reducing its
balance sheet and bolstering its capital. Ensuring and maintaining compliance with further
requirements of this type that may be adopted in the future may lead the Bank to take additional
measures that could weigh on its profitability and adversely affect its financial condition and results of
operations. Moreover, the European Central Bank announced in October 2013 that it will conduct an
asset quality review and perform stress tests on the principal European banks, including the Bank, in
2014. The findings of this review are expected to be released in November 2014 and may result in
recommendations and corrective measures applicable to the Bank or the banking industry.
In 2013 and at the beginning of 2014, France made significant changes to its legal and regulatory
framework applicable to banking institutions. The French banking law of July 26, 2013 on the
separation and regulation of banking activities provides in particular for a separation between
economic financing activities and so-called "speculative" activities that must now be conducted by
ring-fenced subsidiaries that must comply with specific capital and liquidity requirements on a stand-
alone basis. The new banking law also modifies the mechanism for preventing and resolving banking
crises, which wil now be supervised by the French banking regulator ("Autorité de Contrôle Prudentiel
et de Résolution") whose powers have been expanded. In the event of a failure, the law provides for
mechanisms such as the powers to require banks to adopt structural changes, issue new securities,
cancel existing equity or subordinated debt securities and convert subordinated debt into equity, and
to require the intervention of the French Deposit Guarantee and Resolution Fund ("Fonds de Garantie
des Dépôts et de Résolution") in order to, more generally, ensure that any losses are borne in priority
by banks' shareholders and subordinated creditors (such mechanism is referred to as the "Bail-in"
procedure). The Ordinance of February 20, 2014 provides in particular for the strengthening of the
governance rules within banking institutions, a reinforced and harmonized at the EU level sanctions
regime, an extended scope of prudential surveillance with in particular additional prudential

9

requirements, a harmonization of the rules relating to the approval of credit institutions within the
European Union, and an update of the rules relating to the consolidated surveillance and the
exchange of information. At the European level, the European Union adopted, in October 2013, a
single banking supervisory mechanism under the supervision of the European Central Bank, and a
proposal for a European Directive on bank recovery and resolution that provides for a bail-in
mechanism is currently being discussed. The Council of the European Union also announced on
December 18, 2013 an agreement relating to the single resolution mechanism, which provides for the
establishment of a single resolution authority and negotiations for the future establishment of a
common resolution fund financed by banks at the national level. Finally, the European Commission's
proposed regulation on structural measures designed to improve the strength of EU credit institutions
of January 29, 2014 would prohibit certain proprietary trading activities by certain large European
credit institutions and require them to conduct certain high-risk trading activities only through
subsidiaries.
In the United States, the final rule for the regulation of foreign banks imposing certain liquidity, capital
and other prudential requirements recently adopted by the U.S. Federal Reserve will require the Bank
to create a new intermediate holding company for its U.S. subsidiaries, which will be required to
comply with capital, liquidity and other prudential requirements on a stand-alone basis. Moreover, in
October 2013, the Federal Reserve, together with other U.S. regulatory agencies, issued a proposed
rule that strengthens the liquidity requirements of large U.S. banks by establishing a more restrictive
liquidity coverage ratios. Final y, the "Volcker" Rule, recently adopted by the U.S. regulatory
authorities, places certain restrictions on the proprietary trading activities of U.S. banking entities and
on investments by U.S. banking entities in private equity and hedge funds; certain of these restrictions
apply to non-U.S. banks as well.
While a large number of these legislative and regulatory measures, proposed in the wake of the
financial crisis, have been adopted over the course of the past few years, some of them are still under
discussion or subject to revision. These latter measures, if adopted, would need to be adapted to
each country's regulatory framework by national legislators and/or regulators. It is therefore
impossible to accurately predict which additional measures will be adopted or to determine the exact
content of such measures and their ultimate impact on the Bank. In any case, all of these measures,
whether already adopted or in the process of being adopted, may restrict the Bank's ability to al ocate
and apply capital and funding resources, limit its ability to diversify risk and increase its funding costs,
which could, in turn, have an adverse effect on its business, financial condition, and results of
operations. Depending on the nature and scope of regulatory measures that are ultimately adopted,
they could (in addition to having the effects noted above) affect the Bank's ability to conduct (or
impose limitations on) certain types of business, its ability to attract and retain talent (particularly in its
investment banking and financing businesses in light of the adopted and potential additional
restrictions on compensation practices in the banking industry) and, more generally, its
competitiveness and profitability, which would in turn have an adverse effect on its business, financial
condition, and results of operations.
The Bank's access to and cost of funding could be adversely affected by a resurgence of the Euro-
zone sovereign debt crisis, worsening economic conditions, further rating downgrades or other
factors.
The Euro-zone sovereign debt crisis as well as the general macroeconomic environment have at
times adversely affected the availability and cost of funding for European banks during the past few
years. This was due to several factors, including a sharp increase in the perception of bank credit risk
due to their exposure to sovereign debt in particular, credit rating downgrades of sovereigns and of
banks, and debt market speculation. Many European banks, including the Bank, at various points
experienced restricted access to wholesale debt markets and to the interbank market, as well as a
general increase in their cost of funding. Accordingly, reliance on direct borrowing from the European
Central Bank at times increased substantially. If such adverse credit market conditions were to
reappear in the event of a resurgence of the debt crisis, factors relating to the financial industry in
general or to the Bank in particular, the effect on the liquidity of the European financial sector in
general and the Bank in particular could be materially adverse.

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