Early Alliances in Investment Banking:PARIBAS1870-

JACOB SCHIFF HORACE FINALY

Paribas (Banque de Paris et des Pays-Bas) was already an important player in the American market in the 1870s, conducting an investment banking business by issuing securities in France for American railway companies in particular. In 1872, Paribas’s Amsterdam subsidiary underwrote securities of the Lake Erie and Louisville Railway in association with an American banking firm.

The bank was looking for new ways to increase its presence in the United States. As the century began, cooperation between Edouard Noetzlin, the future CEO of Paribas, and Jacob Schiff, the legendary senior partner of US investment bank Kuhn, Loeb & Co.,

became the pillar of Paribas’s American policy. Plans to join the two establishments, by setting up a property asset trust that would enable American companies to obtain funds through bond issues on the French market, were seriously discussed in 1902. However, the project never got off the ground. Three years later, in 1905, Paribas took a different tack: it considered setting up a “French bank of North America,” but had to abandon the plan when a worldwide financial crisis broke out in 1907. Conditions for foreign banks to operate on American soil remained largely unfavorable for the next five decades; the opportunity for Paribas to open a branch on the other side of the Atlantic did not appear again until 1960.

In the interim, Paribas confirmed its status as an investment bank that promoted relations between the two countries. During the First World War, the bank took part in loan negotiations with the United States and underwrote loans contracted by the French government at American banks. Horace Finaly, who headed the bank in the period between the two world wars, contributed greatly to the firm’s American strategy.

1960

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ENTRANCE DOOR OF PARIBAS, 5, RUE D’ANTIN IN PARIS, TODAY THE HEADQUARTERS OF BNP PARIBAS GROUP

PART TWO: OUR EUROPEAN ROOTS

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Finaly had many friends and business relationships in the oil industry. He had visited the United States in 1907 and returned in 1922 at the invitation of Standard Oil Company of New Jersey. On that second trip, he met with many members of the financial and political elite. The war had demonstrated the strategic importance of oil. His 1922 visit resulted in a series of opportunities for Paribas to work with Standard Oil of New Jersey, the largest petroleum company in the world.

In the early 1920s, Standard Oil and Paribas formed French-American Cie Standard, which they owned jointly. Finaly became director of its French subsidiary. Standard managed the business while Paribas provided financial assistance and offered political support to obtain concessions.

SHARE OF THE DUTCH CREDIT AND DEPOSIT BANK, 1872

Paribas based its future oil investments on a similar model. In Poland, it liquidated its former shareholdings and supported the subsidiaries of Standard Oil by granting loans for drilling. The bank also looked for opportunities with Standard in Romania. In the Near East, it facilitated American investments in Turkish Petroleum Company.

Paribas retained its many important US connections ever after the Second World War engulfed France. Maurice Boyer, a representative of Paribas, remained in New York throughout the war.

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