ECB opposes favourable capital treatment for BNP Paribas' AXA deal, source says
PARIS, April 11 (Reuters) - The European Central Bank is opposed to BNP Paribas (BNPP.PA), opens new tab using a favourable capital treatment for its deal to buy French insurer AXA's (AXAF.PA), opens new tab asset management business, a person with knowledge of the matter said.
The ECB's view could have negative implications for consolidation across Europe's financial industry, making certain deals more expensive.
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BNP shares fell on Friday and were last down 3%, underperforming the wider European banking sector, which dropped about 0.2% (.SX7P), opens new tab.
BNP Paribas and AXA declined to comment. The ECB did not immediately respond to a request for comment.
The French bank had asked the ECB to use what is known as the"Danish Compromise" that provides favourable capital treatment in asset management takeovers carried out through banks' insurance businesses.
This makes an asset management acquisition cheaper for the buyer in terms of the hit to its regulatory capital.
The compromise lets banks risk-weight their insurance investments instead of deducting them in full from their capital.
BNP Paribas's AXA deal was agreed last year but is yet to be finalised.
The ECB has said previously it would decide on the use of the Danish Compromise on a case-by-case basis.
Last month, the ECB took a negative stance on Italian bank Banco BPM (BAMI.MI), opens new tab benefiting from the same rule for its acquisition of a local asset manager.
Banking executives are keen to see what stance the ECB takes, with industry sources saying a positive opinion on the use of the Danish Compromise would support further dealmaking.
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