2007 REGISTRATION DOCUMENT

CORPORATE GOVERNANCEReport of the Chairman of the Board of Directors on the conditions for the preparation and organisation 2of the work of the Board and on internal control procedures implemented by BNP Paribas< Contents >PLAYERS INVOLVED IN PERIODIC CONTROLSPeriodic Controls (known as third-level controls) are carried out on anindependent basis by the General Inspection unit, which includes:■ inspectors based at headquarters, who are authorised to carry outcontrols throughout the Group;■ auditors within the various entities of the Group, who report to theGeneral Inspection unit.Periodic Controls are the responsibility of the Head of the GeneralInspection unit who reports operationally to the Chief Executive Officer.He also reports to the Board, either directly or via the Internal Control,Risk Management and Compliance Committee.COORDINATION OF INTERNAL CONTROLThe Internal Control Coordination Committee (ICCC), which meets on amonthly basis, includes the following participants:■ the key players involved in Permanent Controls:■ the Heads of Compliance, Finance-Development and RiskManagement or their representatives,■ the Heads of Tax Affairs, Legal Affairs and Technologies andProcesses or their representatives,■ the Heads of the five core businesses or their representatives;■ the Head of Periodic Controls.Members of the Bank’s Executive Management may attend ICCCmeetings. The Heads of other functions may also be invited to participatein such meetings.At Group level, coordinating Internal Control is the responsibility of theHead of Compliance, who sits on the Executive Committee and chairsthe Internal Control Coordination Committee. The ICCC:■ is not intended to replace the different Group Risk ManagementCommittees but to enhance their effectiveness within the overallsystem;■ guarantees the consistency of the Internal Control system and itscompliance with regulations;■ seeks to promote the use of shared internal control tools;■ enhances the overall consistency of the annual reports on internalcontrol and control of investor services prepared by the PermanentControl and Periodic Control functions as required under their “Charterof responsibilities”, and of the report of the Chairman of the Board ofDirectors on internal control procedures prepared in accordance withArticle L. 225-37 of the French Commercial Code.The Chairman of the ICCC reports to the Chief Executive Officer and, ifthe CEO or the Board of Directors deems it necessary, to the Board ofDirectors or the relevant Committee of the Board (usually the InternalControl, Risk Management and Compliance Committee).In 2007, the ICCC’s work covered the following main topics:■ the Internal Control report for 2006 and the results reported by thePermanent Controls function;■ the Group’s key charters or new policies in the area of controls;■ relations with regulatory authorities, particularly outside France;■ the organisation of internal control processes within the corebusinesses and ways of harmonising the tools used, risk assessmentmethodologies and the overall quality assurance programme of thePeriodic Controls function;■major operational issues such as implementation of the EuropeanMarkets in Financial Instruments Directive and fraud prevention.PROCEDURESWritten guidelines are distributed throughout the Group and providethe basic framework for the Group’s internal control, setting out theorganisational structures, procedures and controls to be applied. A teamworking within the Compliance function along with the PermanentControl-Operational Risk team, which report to both the Complianceand Risk Management functions, check that procedural guidelines areregularly monitored for completeness via a network of Procedure andPermanent Control correspondents.Following the completion in 2004 of the Group’s cross-functionalguidelines (levels 1 and 2), their content is now updated as part of anongoing process in which all the core businesses and functions activelyparticipate. The guidelines are currently in the process of being updated.As regards the organisation of controls, the twice-yearly surveys on theeffectiveness of processes have been integrated into the twice-yearlyreporting of the Permanent Controls function – in recognition of the factthat checking procedures is one of the key tasks of Permanent Controls,alongside identifying and assessing risks, running controls, verifyingreporting processes and overseeing the monitoring system.Among the Group’s cross-functional procedures, the roll-out of theprocedure dealing with the validation of exceptional transactions, newproducts and new activities deserves a special mention. This procedure,which was updated in 2006 to reflect changes in regulations and theGroup’s new Internal Control organisation, is applicable to all Groupentities and represents one of the pillars of the system for controllingall forms of risk to which the Group is exposed.Efforts are ongoing to streamline the set of procedures and the applicablestandards, improve their distribution and planning, make them moreaccessible and design better tools for storing them.INTERNAL CONTROL STANDARDSIn 2007, the key players involved in Internal Control continued to workon standardising the main components of the system.HIGHLIGHTS OF 2007The actions carried out during the year mainly focused on rolling outnew organisation standards and consolidating Group Internal Controlstandards.Group Compliance functionIn 2007, the Compliance function kept pace with both the Group’scontinued expansion and new regulatory requirements. As regards theGroup’s expansion, the addition of UkrSibbank and the ongoing processof merging Banca Nazionale del Lavoro into the Group are worthyof note. The Compliance function was closely involved in bringingorganisation and control standards in these entities into line with thoseof BNP Paribas. As regards regulatory developments, the major event in2007 was the entry into force of the Markets in Financial InstrumentsDirective (MiFID).All of the core businesses, support functions and subsidiaries locatedwithin the European Union brought their organisations into line withthe requirements of the Directive in spite of regulatory difficulties,12345678910112007 Registration document - BNP PARIBAS 57