French bank BNP Paribas has announced that it will close its activities in jurisdictions that have failed to comply with the OECD standard on transparency and information exchange.
Speaking to French radio station Europe 1, Chief Executive, Baudouin Prot said that the bank’s subsidiaries in jurisdictions featured on the OECD’s ‘grey list’ would be closed, without giving a timescale. Prot did however hint that the proposal would not be implemented immediately and that there was flexibility on the matter, noting that the list’s composition evolved regularly.
According to Prot, BNP Paribas has "half a dozen" subsidiaries in low tax jurisdictions, but only two, in the Bahamas and Panama, are located in OECD 'grey listed' territories.
Panama agreed to implement the OECD standard on tax information exchange on April 15, 2002, but has as yet signed no tax information exchange agreements towards satisfying the twelve TIEA quota set at the G20 summit of April 2, and remains on the OECD’s ‘grey’ list of territories that have ‘committed to the internationally-agreed tax standard, but have not yet substantially implemented it'.
The Bahamas has also committed to the standard and recently signed its 2nd tax information exchange agreement with Monaco.It would appear that BNP Paribas is acting on the back of a suggestion in early-September by French President Nicolas Sarkozy who suggested that France encourage domestic banks to shut operations in 'non-transparent' territories. The French State acquired a stake worth EUR5.1bn in BNP following a bailout on March 31, 2008, which Prot further informed would be repaid in a shorter timescale than previously agreed.
A comprehensive report in our Intelligence Report series, examining in depth the situation of offshore transparency and secrecy in a number of the most prominent jurisdictions, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report2.asp
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