provided by BNPP to the Board in connection with the notice and the conditions
contained in the previous decisions noted above. Those commitments and
conditions are critical to the determination that the proposed activities would not
pose a substantial risk to the safety and soundness of BNPP, other financial
institutions, or the financial system generally. In addition, the determinations in
this letter are subject to the Board’s authority to require modification or
termination of the activities of a bank holding company or any of its subsidiaries
as the Board finds necessary to ensure compliance with, or to prevent evasion
of, the provisions and purposes of the BHC Act and the Board’s regulations and
orders issued thereunder. These determinations are specifically conditioned on
compliance with all the commitments and conditions made in connection with
this notice, including the commitments and conditions discussed in this letter,
and the conditions in the Board’s previous decisions noted above. The
commitments and conditions relied on in making these determinations are
deemed to be conditions imposed in writing by the Board in connection with the
notice and this approval and, as such, may be enforced in proceedings under
applicable law.

Sincerely yours,

Net deY. Frer~

Robert deV. Frierson
Deputy Secretary of the Board

ce: Ivan J. Hurwitz, Vice President
Federal Reserve Bank of New York


BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM

WASHINGTON, D.C. 2055!

ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD

December 5, 2008

Robert L. Tortoriello, Esq.

Cleary Gottlieb Steen & Hamilton LLP
One Liberty Plaza

New York, New York 10006-1470

Dear Mr. Tortoriello:

This letter concerns the notice filed November 19, 2008, under
section 4 of the Bank Holding Company Act (“BHC Act”) by BNP Paribas
(“BNPP”), Paris, France, to enter into physically settled tolling agreements with
power plant owners (“Energy Tolling”) and to provide energy management
services to power plant owners (“Energy Management Services”) in the United
States, indirectly through its proposed subsidiary, Fortis Bank S.A./N.V. (“Fortis
Bank Belgium”), Brussels, Belgium.'

BNPP and Fortis Bank Belgium have each received Board approval
to engage in physical commodity trading in the United States (“Physical
Commodity Trading”) as an activity that is complementary to the financial
activity of engaging in commodity derivatives transactions (“Commodity
Derivatives Activities”).’ Fortis also has received Board approval to engage in

' The Belgian government acquired a controlling interest in Fortis Bank Belgium from its
parent companies, Fortis S.A./N.V. and Fortis Brussels S.A./N.V., earlier this year as part of a
financial assistance effort. BNPP is expected to acquire a controlling interest in Fortis Bank
Belgium from the Belgian government this month.

? See Board letters regarding BNPP (August 31, 2007) and Fortis S.A./N.V.

(September 29, 2006) (“Fortis PCT Approval”), BNPP and Fortis Bank Belgium have
entered into commitments with the Board that limit the amount of risk that they may incur
through Physical Commodity Trading. Their commitments are substantially the same, except
that BNPP has also committed to conduct Physical Commodity Trading in the United States
exclusively under the authority of section 4 of the BHC Act and not to conduct such activities
in the United States in reliance on section 2(h)(2) of the BHC Act or 211.23(f)(5) of the


Energy Tolling’ and to provide Energy Management Services’ in the United
States as activities that are complementary to Commodity Derivatives Activities
and, in the case of Energy Management Services, also complementary to
providing financial and investment advisory services for derivatives transactions
(“Derivative Advisory Services”).’

BNPP has requested approval to engage in Energy Tolling and to
provide Energy Management Services, indirectly through Fortis Bank Belgium,
after it acquires a controlling interest in that bank. Fortis Bank Belgium
conducts these activities primarily through a nonbank subsidiary, Fortis Energy
Marketing & Trading GP (“FEMT”). A separate request for approval would be
required for BNPP to engage in Energy Tolling and to provide Energy
Management Services other than indirectly through Fortis Bank Belgium.

The Board has delegated to the Director of the Division of Banking
Supervision and Regulation, with the concurrence of the General Counsel,
authority to approve requests by financial holding companies to engage in
Energy Tolling and to provide Energy Management Services, if the proposal
meets the conditions imposed by the Board when approving previous requests
and does not raise significant legal, policy, or supervisory issues.

BNPP has represented to the Board that after its acquisition of
Fortis Bank Belgium, it does not plan to change (1) the legal structure of Fortis
Bank Belgium or FEMT or (2) any of the policies, procedures, systems,
controls, operations, risk management, or legal and compliance standards
currently being applied by Fortis Bank Belgium and FEMT in conducting

Board’s Regulation K. On consummation of the proposal, BNPP’s commitments will apply
to the entire BNPP organization, including Fortis Bank Belgium.

3 Board letter regarding Fortis S.A./N.V. (May 21, 2008) (“Fortis ET Approval”).

4 Fortis S.A./N.V., 94 Federal Reserve Bulletin C20 (2008) (together with the Fortis ET
Approval, “Fortis Energy Approvals”).

5 The Board has determined by regulation prior to November 12, 1999, that Commodity
Derivatives Activities and Derivative Advisory Services are closely related to banking.
12 CFR 225.28(b)(8) and (b)(6). These activities are, therefore, financial in nature for
purposes of the BHC Act. See 12 U.S.C. § 1843(k)(4)(F).


Energy Tolling and providing Energy Management Services. In addition, BNPP
also has represented that it would subject FEMT to specific internal audit and
reporting requirements and other controls that are substantially similar to those
BNPP currently applies to its U.S. nonbanking subsidiaries.

Moreover, BNPP has committed to the Board that, unless it
receives the Board’s prior approval, it will only conduct Energy Tolling and
provide Energy Management Services indirectly through Fortis Bank Belgium.
BNPP has also committed to engage only in those Energy Management Services
and Energy Tolling activities that are authorized by the Fortis Energy Approvals
and not to expand the size or scope of Fortis Bank Belgium’s Energy Tolling
and Energy Management Services beyond that already authorized by the Fortis
Energy Approvals. In addition, BNPP has committed that it will conduct
Energy Tolling and Energy Management Services consistent with the terms and
conditions of the Fortis Energy Approvals and in compliance with each of
commitments made by Fortis Bank Belgium in connection with the Fortis
Energy Approvals and Fortis PCT Approval. These conditions and
commitments are designed to limit the amount of risk incurred in connection
with those activities.

Approval of the current proposal would likely benefit BNPP’s and
Fortis Bank Belgium’s customers by enabling Fortis Bank Belgium’s customers
to continue to benefit from the provision of Energy Tolling and Energy
Management Services, allowing BNPP to offer its customers these services
through Fortis Bank Belgium, and enabling Fortis Bank Belgium to continue to
serve as an effective competitor in physical commodity and commodity
derivatives markets.

Based on all the facts of record, including all the commitments
made to the Board in connection with the notice and the conditions imposed by
the Board in previous cases, the Director, with the concurrence of the General
Counsel, has determined that the proposed activities would not pose a
substantial risk to BNPP, depository institutions operated by BNPP, or the
financial system generally and that the proposal can reasonably be expected to
produce benefits to the public that outweigh any potential adverse effects.

In making these determinations, the Director and the General
Counsel have relied on all the information, representations, and commitments