A call to order from the central bank

The situation at Paribas Nederland finally drew the attention of the Nederlandsche Bank. Following a meeting on 1 December 1982 with Gustave Rambaud and Christian Hollander, the Dutch central bank instructed Paribas Nederland in February 1983 to increase its provisions for general operating risks, also remarking that despite the existence of a rule limiting total exposure to any one client to 25% of total net worth, the Bank s open currency positions frequently translated into individual risk representing as much as 75% of its net worth.

Observations of the General Inspectorate

In 1982 the parent company, the Compagnie financière de Paris et des Pays-Bas, sent an internal audit team from the General Inspectorate over to the Netherlands. The audit took place from 1 April to 8 October that year and the summary report is dated 1 March 1983.

Describing the country s economic situation, the Inspectorate stated that having previously been a model of stability in Europe, the Dutch economy began to encounter problems in 1980. This was the start of a period marked by the introduction of a strict austerity programme. A decline in purchasing power, budgetary restrictions and increases in interest rates have badly affected many sectors, in particular those focused on the domestic market (public works, construction, retail distribution, textiles, etc), all the more so as many companies were already heavily indebted. In this situation, our subsidiary, ranked 9 in the country, has had to book a large number of bad debts and consequently has had to make sizeable provisions.

Regarding business expansion and its impact on the balance sheet, the auditors were forced to conclude that the situation is basically due to the new branch openings that took place from 1969 onwards ( ) at a rate of expansion which would inevitably raise many problems of adjustment and integration, which have not all been resolved in a satisfactory manner.

Analysing the Dutch subsidiary s results, the auditors stressed the lack of asset cover at stable rates and the lack of rigour both as regards the scrutiny of loan applications and the general oversight of operations. Moreover, the report points to the absence of any real toolkit to enable the subsidiary to monitor activities and assess the profitability of the various business lines. The auditors expressed particular astonishment that Alcredis, the consumer credit business, kept no proper statistics showing the amounts outstanding.

First strategic change of direction

The year 1983 was devoted to putting recovery measures in place. In June the Bank decided to close the smaller branches.

CLAUDE DE KEMOULARIA

Claude de Kémoularia

In September 1988, Claude de Kémoularia, former French Ambassador to the Netherlands, was appointed Chairman of the Supervisory Board of Paribas Nederland.

Born in 1922, Claude de Kémoularia studied at the Ecole libre des Sciences politiques ( Sciences Po ) in Paris, graduating in 1945. As parliamentary assistant and then chief of staff to Paul Reynaud (a cabinet Minister and Prime Minister under the 3rd and 4th French Republics), de Kémoularia was initiated into the world of French politics and forged relationships with political figures from all parties and persuasions.

He also served as an international civil servant, working as personal assistant to the Secretary-General of the United Nations, was chief of staff to Prince Rainier of Monaco from 1966 to 1967, and also acted as advisor to and sat on the boards of several companies including Forges de Châtillon Commentry and Banque Paribas.

He became advisor on international affairs to the President and the CEO of Paribas in 1968, a post he held until 1982.

President François Mitterrand appointed him French ambassador to the Netherlands from 28 May 1982 to 30 October 1984. He then became France s permanent representative to the United Nations from 1 January 1985 to 10 February 1987. While in this post he chaired the United Nations Security Council.

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