Wealth management results for BNP Paribas were positive in the second quarter, but such figures were overshadowed by the impact of the recent huge US settlement reached over sanctions breaches.

The wealth and asset management arm of BNP Paribas, which is reeling from the $8.97 billion settlement with the US over breaches of US sanctions against blacklisted nations, said pre-tax income, excluding exceptional items, was €196 million ($262 million) in the second quarter of 2014, up from €185 million a year ago. The bank also unveiled a raft of management changes, including the planned retirement of its group compliance head.

France’s biggest bank said revenues in its wealth and asset management arm were €710 million, up from €696 million a year earlier. Wealth management assets under management stood at €295 billion.

The performance of this arm of BNP Paribas, contained within results of its investment solutions division, was inevitably overshadowed by the bank’s recent huge US settlement after it had admitted breaches of sanctions against countries such as Iran and Sudan, setting a new record for such a punishment.

As a result, there was a net loss attributable to equity holders which came to -€4.317 billion (net income of €1.765 billion in the second quarter 2013). Excluding the impact of the one-off items, net income attributable to equity holders totalled €1.924 billion, up 23.2 per cent compared to the same period last year.

The share price of the bank today was quoted up 0.6 per cent from the open at €49.94 per share, suggesting much of the news about the impact of the US settlement has been priced in by investors.

In its statement, BNP Paribas said that given the amount already provisioned for the US settlement, it booked this quarter a one-off charge for a total amount of €5.950 billion, of which €5.750 billion in penalties and €200 million corresponding to the future costs of the remediation plan announced at the time of the settlement.

Excluding these items, the “group’s performance was very good this quarter”, it said.

The group’s revenues totalled €9.568 billion, down 2.3 per cent compared to the second quarter 2013. It included this quarter two exceptional items for a net total of -€353 million: -€166 million as a result of the introduction of Funding Valuation Adjustment (FVA) at fixed income and -€187 million euros in Own Credit Adjustment (OCA) and own credit risk included in derivatives (DVA). The one-off revenue items at the same period last year totalled +€150 million. Excluding these exceptional items and at constant scope and exchange rates, revenues rose by 4.8 per cent compared to the same quarter last year.

Retirement, compliance overhaul
Separately, the French bank said it has made a “major reorganisation” to strengthen internal controls, including boosting the number of compliance-focused staff from the current 1,600 number. It also announced a swathe of senior appointments. The head of group compliance since 2008, Jean Clamon, is to retire as planned, before the end of 2014, the bank said. He has worked at the bank since 1976.

Michel Konczaty has been appointed deputy chief operating officer. Currently head of group risk management, he was previously in charge of a number of CIB businesses, including Structured Finance and Capital Markets Origination, and held various posts in the branch network in France.

Frank Roncey has been appointed head of group risk management, and will also join the BNP Paribas Executive Committee. Currently head of retail and corporate risk management at GRM, he previously worked in various management posts including chief market and liquidity risk officer and in the US as chief risk officer Americas.

Eric Martin has been appointed head of group compliance, and will become a member of the BNP Paribas executive committee. He is currently head of the inspection Générale (Group Internal Audit) function, previously serving as country head for Japan, Germany and Luxembourg, among other.

Nathalie Hartmann has been appointed to head up the Remediation Plan, reporting to Eric Martin. She is currently head of portfolio management and transversal business functions at CIB, and has previously served in various roles within the structured finance business.

Gilbert Coulombel has been appointed head of the inspection Générale function. Currently head of the Paris Basin branch network, he previously headed up the West France network and has served in various other posts across the branch network in France.

Some of its initiatives, it said, will comprise a “vertical integration” of group compliance and group legal functions; creation of a group supervisory and control committee, meeting twice-monthly under the chairmanship of the chief executive, and the creation of a committee, including external, non-BNP Paribas figures, to shape and oversee how the bank implements its code of ethics and business conduct standards. BNP Paribas has also started an overhaul of its organisation and processes, hiring an “international consultancy firm” for the work.