338 2019 Universal registration document and annual financial report - BNP PARIBAS

5 risks and CaPital adequaCy Pillar 3

5

Credit risk

Industry risks are monitored in terms of gross exposure and RWAs, in particular:

■ the leveraged finance sector:

at 31 December 2019, the Group s exposure to Leverage Buy-Out transactions ( LBO ) was low at EUR 11.9 billion, or less than 1% of the Group s gross balance sheet and off-balance sheet commitments. These exposures are individually very small with an average amount of EUR 6 million per loan (EUR 17 million on average taking account of all business group exposures), and mainly concern European counterparties.

Moreover, in accordance with the ECB Guidelines, the Group has put in place a system for monitoring companies whose leverage ratio exceeds the threshold set by the regulator;

■ the shipping sector:

the Shipping sector covers a set of sub-segments with very different dynamics: bulk, oil tankers, container carriers, oil services, and cruise. In 2019, despite the continuing recovery of oil prices, the offshore oil

services sub-segment continued to be affected, while limited supply helped the oil tanker segment recover. Cruise was the only sub- segment to experience continued growth.

In 2019, the shipping finance segment also reacted to the new environmental requirements set to take effect in 2020, with many ships out of commission during the modernisation process.

Shipping gross exposure, which increased by 12.3% in 2019, was EUR 19.7 billion as at 31 December 2019, i.e. 1.2% of the Group s on and off-balance sheet exposures. Doubtful loans represent 5% of Group exposure to the Shipping sector.

The Group remains diversified. No sector makes up more than 11% of total corporate lending or more than 5% of total lending at 31 December 2019.