PARIS -BNP Paribas revised its return forecast on Capital to acquire the acquisition of AXA Investment Managers, for an amount of 5.1 billion euros, the French bank said in a statement on Monday.

BNP declared to expect a return to capital of more than 14% in the third year, while the group previously provided for a return of 18%. This return should be more than 20% the fourth year, the bank added.

This revision occurs following the announcement by the ECB of its interpretation relating to the prudential treatment for acquisitions of asset management companies.

On the basis of this interpretation, BNP Paribas estimates the impact of the operation on the CET1 ratio, a key measure of its financial health, at around -35 base points (PB), against -25 PB previously provided.

The updated guidelines concerned in particular the right to use “the Danish compromise”, a regulatory system to reduce the capital cost of the insurance activities of banking groups by avoiding the double count of capital requirements of the two activities.

The BNP action lost 2.41% on Friday, underperforming the European banking sector as a whole, after the news agency Bloomberg reported that the ECB had opposed the application of this system.

The new ECB’s new interpretations could cause negative consequences on the consolidation of the European financial sector, by making certain operations more expensive.

The transaction is expected to be finalized in July, specifies the press release, which adds that the action and dividend buying plans remain unchanged.

The terms selected to process this operation will be communicated at the time of closing, according to the press release.

(Written by Elena Smirnova with Mathieu Rosemain, edited by Augustin Turpin)

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