French bank BNP Paribas has said it expects an estimated net profit of €3 billion ($3.9 billion) for 2008, results which it says are thanks to the “good performance” of its asset management and retail banking divisions.

Assets under management saw net inflows of around €10 billion, along with around 250,000 new retail accounts being opened in its domestic French and Italian markets, the bank said in a statement. 

For the fourth quarter, the BNP Paribas Group expects to post a net loss of around €1.4 billion, with its corporate and investment banking division recording a pre-tax fourth quarter loss of around €2 billion.  The bank also said impairments to its investment portfolio will probably amount to around €400 million after tax due to the sharp declines in the stock markets.

The bank intends to materially cut its risk-weighted assets in 2009 and said this reduction will come mostly from reducing its exposure to market risks, particularly within corporate and investment banking.

In another development, the bank's board of directors will convene an EGM to enable shareholders to vote on the proposal to issue €5.1 billion of preference shares to the French state and simultaneously repay the €2.55 billion of subordinated debt issued in December 2008.  These transactions, BNP Paribas said, would strengthen the bank’s Tier 1 ratio by €2.55 billion, equivalent to 50 basis points, taking it to around 8 per cent on a pro-forma basis.

Last week it was reported that the French government had agreed to provide a further €10.5 billion ($13.6 billion) in aid to the country’s biggest lenders in exchange for their top executives giving up their bonuses.

President Nicolas Sarkozy has been reiterating that banks should not pay bonuses to management or dividends to shareholders. BNP Paribas, Credit Agricole, Societe Generale have all announced that they will not pay bonuses to their chairmen and chief executives.

The French finance minister Christine Lagarde said the state wants banks to use the extra funds to build shareholder equity, but that the more profitable banks may still pay a dividend.

BNP Paribas will publish its annual results for 2008 on 19 February, after which dividend proposals will be submitted.