2007 REGISTRATION DOCUMENT

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5 NotesCONSOLIDATED FINANCIAL STATEMENTSto the financial s tatements p repared in accordance with I nternational Financial Reporting S tandards as adopted by the European Union< Contents >➤SHARE AWARD PLANS2007 2006Number of shares Number of sharesSHARES OUTSTANDING AT 1 JANUARY 595,669 -Shares granted during the period 910,923 608,651Shares vested during the period (463) (265)Shares expired during the period (22,499) (12,717)SHARES OUTSTANDING AT 31 DECEMBER 1,483,630 595,66912Value attributed to stock options and share awardsAs required under IFRS 2, BNP Paribas attributes a value to stock optionsand share awards granted to employees and recognises an expense,determined at the date of grant, calculated on the basis of the fairvalue of the options and shares concerned. This initial fair value maynot subsequently be adjusted for changes in the quoted market price ofBNP Paribas shares. The only assumptions that may result in a revision tofair value during the vesting period, and hence to an adjustment in theexpense, are those related to the population of grantees (loss of rights).The Group’s share-based payment plans are valued by an independentspecialist firm.Measurement of stock subscription optionsBinomial or trinomial tree algorithms are used to build in the possibilityof non-optimal exercise of options from the vesting date. The MonteCarlo method is used to price in the characteristics of certain secondarygrants linking options to the performance of the BNP Paribas sharerelative to a sector index.The implied volatility used in measuring stock option plans is estimatedon the basis of a range of ratings prepared by various dealing rooms.The level of volatility used by the Group takes account of historicalvolatility trends for the benchmark index and BNP Paribas shares overa 10-year period.Stock subscription options granted on 8 March 2007 were valued atEUR 14.57 and EUR 12.90 depending on whether or not they are subjectto performance conditions (compared with EUR 15.36 and EUR 14.03,respectively, for stock subscription options granted in 2006). Stocksubscription options granted on 6 April 2007 were valued at EUR 16.68and EUR 14.47, respectively.345Year to 31 Dec. 2007 Year to 31 Dec. 20068 March 2007 Plan 6 April 2007 Plan 5 April 2006 PlanBNP Paribas share price on the grant date (in euros) 79.31 80.60 76.85Option exercise price (in euros) 82.70 75.50 75.25Implied volatility of BNP Paribas shares 23.3% 23.3% 22.4%Expected option holding period 7 years 7 years 7 yearsExpected dividend on BNP Paribas shares (1) 4.0% 4.0% 3.5%Risk-free interest rate 4.1% 4.3% 4.0%Expected proportion of options that will be forfeited 1.5% 1.5% 1.5%(1)The dividend rate shown above is an average of the estimated annual dividends over the life of the option.Measurement of share awardsThe unit value used to measure shares awarded free of considerationis the value at the end of the compulsory holding period plus dividendspaid since the date of acquisition, discounted at the grant date.The value of shares awarded free of consideration by BNP Paribas in2007 was EUR 72.43 for the shares whose holding period expires on10 March 2011, and EUR 65.48 for shares whose holding period expireson 29 June 2012.678910111742007 Registration document - BNP PARIBAS
CONSOLIDATED FINANCIAL STATEMENTS5Notes to the financial s tatements p repared in accordance with I nternational Financial Reporting S tandards as adopted by the European Union< Contents >7.c.2Shares subscribed or purchased by employees under the Company Savings PlanYear to 31 Dec. 2007 Year to 31 Dec. 2006Date plan announced 15 May 2007 18 May 2006Quoted price of BNP Paribas shares at date plan announced(in euros) 92.77 72.25Number of shares issued or transfered 5,971,476 4,670,388Purchase or subscription price (in euros) 69.20 60.50Five-year risk-free interest rate 4.16% 3.88%Five-year borrowing cost 8.00% 7.20%Borrowing cost during the holding period 16.56% 14.54%The Group did not recognise an expense in relation to the CompanySavings Plan in 2006 as the discount granted to employees subscribingor purchasing shares under this plan represents a non-material financialexpense for BNP Paribas when valued taking into account the five-yearcompulsory holding period applicable to the shares purchased. Of thetotal number of BNP Paribas Group employees who were offered theopportunity of buying shares under the Plan in 2007, 52% accepted theoffer and 48% turned it down.1234Note 8.ADDITIONAL INFORMATION8.a CHANGES IN SHARE CAPITALAND EARNINGS PER SHARE8.a.1Management of regulatory capitalThe BNP Paribas Group is required to comply with the French regulationsthat transpose European Union capital adequacy directives (Directive onthe Capital Adequacy of Investment Firms and Credit Institutions andFinancial Conglomerates Directive) into French law.In the various countries in which the Group operates, BNP Paribas alsocomplies with specific regulatory ratios in line with procedures controlledby the relevant supervisory authorities. These ratios mainly address theissues of capital adequacy, risk concentration, liquidity and asset/liabilitymismatches.The capital adequacy ratio corresponds to total regulatory capitalexpressed as a percentage of the sum of:■ risk-weighted assets; and■ the regulatory capital requirement for market risks, multiplied by12.5.Regulatory capital is determined in accordance with Comité de laRéglementation Bancaire et Financière (CRBF) regulation 90-02 dated23 February 1990. It comprises three components – Tier One capital, TierTwo capital and Tier Three capital – determined as follows:■ t ier One capital corresponds to consolidated equity (excludingunrealised or deferred gains and losses), adjusted for certain items.The main adjustments consist of (i) deducting the planned dividendfor the year, as well as goodwill and other intangibles, (ii) excludingconsolidated subsidiaries that are not subject to banking regulations –mainly insurance companies – and (iii) applying limits to the eligibilityof certain securities, such as preferred shares and undated supersubordinated notes;■ t ier Two capital consists of subordinated debt (see Note 5.f) and part ofunrealised gains on variable-income securities. A discount is applied tosubordinated debt due in less than five years, and dated subordinateddebt included in Tier Two capital is capped at the equivalent of 50%of Tier One capital. Total Tier Two capital is capped at the equivalentof 100% of Tier One capital;■ t ier Three capital comprises subordinated debt with shorter maturitiesand can only be allocated to covering a certain proportion of marketrisks;■ the carrying amount of investments in associates (accounted for bythe equity method), subordinated debt towards credit institutions andfinance companies and the regulatory capital of companies subject tobanking regulations that are more than 10% owned by the Group arededucted for the purpose of calculating regulatory capital.5678910112007 Registration document - BNP PARIBAS 175
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2007REGISTRATION DOCUMENT
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2007 Registration documentThis docu
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1 TheTHE BNP PARIBAS GROUPBNP Parib
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THE BNP PARIBAS GROUP1The Group’s
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1 ShareholderTHE BNP PARIBAS GROUPi
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2 BoardCORPORATE GOVERNANCEof Direc
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2 StatutoryCORPORATE GOVERNANCEAudi
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3RISK MANAGEMENT< Contents >3.4 Ris
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3 RiskRISK MANAGEMENTfactorsLIQUIDI
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3 RiskRISK MANAGEMENTfactorsDETERIO
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3 RiskRISK MANAGEMENTmanagement fra
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3 RiskRISK MANAGEMENTexposure in 20
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4 Consolidated2007 REVIEW OF OPERAT
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4 Core2007 REVIEW OF OPERATIONSbusi
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4 Balance2007 REVIEW OF OPERATIONSs
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2007 REVIEW OF OPERATIONS4 Outlook<
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2007 REVIEW OF OPERATIONS4 OutlookA
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5CONSOLIDATED FINANCIAL STATEMENTS<
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5 ProfitCONSOLIDATED FINANCIAL STAT
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5 StatementCONSOLIDATED FINANCIAL S
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5 StatementCONSOLIDATED FINANCIAL S
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5 NotesCONSOLIDATED FINANCIAL STATE
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6INFORMATION ON THE PARENT COMPANY
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6 BNPINFORMATION ON THE PARENT COMP
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6 ChangesINFORMATION ON THE PARENT
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6 BNPINFORMATION ON THE PARENT COMP
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6 SubsidiariesINFORMATION ON THE PA
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6 SubsidiariesINFORMATION ON THE PA
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7 TheSOCIAL AND ENVIRONMENTAL INFOR
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7 ClearlySOCIAL AND ENVIRONMENTAL I
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8 DocumentsGENERAL INFORMATIONon di
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8 FoundingGENERAL INFORMATIONdocume
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8 YearGENERAL INFORMATIONended 31 D
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9 StatutorySTATUTORY AUDITORSAudito
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10 PersonPERSON RESPONSIBLE FOR THE
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11TABLE OF CONCORDANCE< Contents >H
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