BNP Paribas Earnings to Be Dented by Write-Down

PARIS—French bank BNP Paribas SA said it will write down part of the goodwill related to its Italian unit BNL, after European regulators asked the Paris-based lender to set aside additional capital for BNL following an intensive review.

The write-down will result in a reduction to fourth-quarter earnings of about €900 million ($983.2 million), the bank said in a statement.

BNP Paribas, France's largest listed bank by assets, said that its capital cushions to cover potential losses, stood well above the threshold set by the European Central Bank for 2016. The ECB can prevent any bank that fails to meet minimum requirements from paying out dividends on stock and bonuses to some employees.

BNP Paribas' core tier one ratio—which measures the amount of top quality capital such as equity and retained earnings against risk-weighted assets—stood at 10.9% on Sept. 30, above the 10% threshold.

The bank confirmed its 45% dividend payout target.

To help bolster its capital buffers, the Paris-based lender also said that it was "contemplating strategic alternatives" for its subsidiary First Hawaiian Bank.

The ECB recommends that BNP raise its core tier one capital ratio to 11.5% by 2019, the bank said.

European regulators are turning up the pressure on large banks to continue to expand capital buffers to better absorb potential losses and reduce their reliance on volatile forms of funding, as authorities seek to fix a financial system that is still ailing from the financial crisis.

While record-low interest rates and a stagnating economy are putting pressure on banks' margins, French lenders have been able to restructure quickly to meet tighter regulation.

French rivals Cré dit Agricole SA, France's second-largest bank by assets, and Socié té Gé né rale SA said earlier this week that their capital ratios stood above the minimum capital levels that will be required by the ECB starting next month.

BNP Paribas shares closed down 0.8% at €53.30.

Write to Noemie Bisserbe at noemie.bisserbe@wsj.com

(END) Dow Jones Newswires

December 27, 2015 06:35 ET (11:35 GMT)

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