BNP Paribas’ forerunners were created and developed during the tremendous industrial boom sweeping Europe in the 19th century. They were players in the second banking revolution, which saw the savings needed to finance economic development drained from accounts.
BNP Paribas Forerunners’ and the banking revolution of the 1850s
The pioneer was Société Générale de Belgique, the ancestor of BNP Paribas Fortis, which was founded in Brussels in 1822. It invented the hybrid bank, combining deposit management and corporate sponsorship, with Crédit Mobilier (founded by the Pereire brothers) soon following suit.
In 1848, in the midst of a political revolution and economic crisis, France saw the creation that same year of discounting firms by the public authorities, in conjunction with private-sector parties, designed to facilitate lending circuits. Thus the two ancestors of the BNP came to be: Comptoir National d’Escompte de Paris (CNEP), supported by Parisian booksellers and publishers, and Comptoir National d’Escompte de Mulhouse, backed by Alsatian industrialists.
These institutions triggered the banking revolution that took place around the 1850s and 1860s: it was at this time that private individuals gained access to general banking and borrowing services through the creation of major deposit banks. These new institutions attracted dormant savings and recycled the funds back into the economy, notably through bill discounting and short-term loans to businesses. A range of new services also became available to middle-class individuals: cashier services, safe deposit box rentals, cheques, securities deposits, letters of credit, etc. The novelty was that banks were now working face-to-face with their customers through networks of branches.
CNEP’s headquarters, built in 1878, is a highly visible symbol of the bank’s presence in Paris.
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Comptoir National d’Escompte de Paris: balancing internationalisation and crisis management
Following the Franco-British Free Trade Treaty of 1860, CNEP was the first French bank to build an international network for the purpose of financing international trade. It set up shop in Shanghai in 1860, and in India the same year, to finance cotton imports into France. Branches were also opened in Australia in 1881 to meet the demand of the wool industry in northern France and in Mazamet in southern France.
In the 1880s, the banking sector was still fragile and was often beset by crisis. CNEP experienced a serious crisis itself in 1889. It was immediately refounded and resumed its activities under the conservative management of Alexis Rostand. The strong risk culture he instilled at the time has survived over the decades.
The period from 1870-1914 was marked by a strong surplus of savings in France, and Paris was competing with London as a financial centre. CNEP built up a reputation in the financial markets for managing and placing sovereign and corporate bond issues, as well as for issuing cooperative shares.
In the banking syndicates set up to raise the capital needed to finance major projects, CNEP often found itself in the company of a major French merchant bank, Banque de Paris et des Pays-Bas, generally known as Paribas. In a curious twist of fate, the two financial institutions found themselves, along with Belgian bank Société Générale de Belgique – which later joined BNP Paribas Group under the name Fortis – involved in 1899 in a project to finance the construction of the Peking-Hankow railway, covering a distance of more than 1,200 kilometres between present-day Beijing and Hankou.
Paribas: birth of a bank with strong European roots
Paribas was created in 1872 from the merger of a Parisian bank (Banque de Paris) and an international financial company which, from the outset, had operations in the Netherlands, Belgium, Switzerland and France. Among the directors were several renowned French bankers, such as Adrien Delahante and Alphonse Pinard, as well as members of the Bischoffsheim family from Germany and the Hentsch family from Switzerland. It was a typically European bank, having inherited the traditions of high finance practiced by old banking families, and involved in large-scale operations requiring technical expertise.
This institution was created to issue Liberation Bonds and, over the longer term, to acquire stakes in companies and to enter the capital markets.
Unlike CNEP, Paribas had no network of branches, instead operating from four offices – in France, Belgium, the Netherlands and Switzerland – and basing its business on alliances and the banks and associates it had helped to create. By steadily expanding its assets, Paribas became France’s leading investment bank at the turn of the20th century.
BNL: a major player in Italy’s development
In 1913, at the government’s initiative, Istituto Nazionale di Credito per la Cooperazione was created in Rome with the aim of supporting the cooperative movement in Italy by providing aid specifically targeting the agriculture, cinema and fishing industries. Still very rural at the time, the Italian economy had to industrialise. It played a major role in the post-WWII reconstruction and set up a unique system for financing Italian cinema, resulting in the production of the greatest masterpieces.