(Some of the numbers in this story have been revised in the light of additional data since the original date of publication).

As far as the wealth management business of France’s BNP Paribas is concerned, big is definitely beautiful.

This operation, boosted by the €10.4 billion (around $14.1 billion) acquisition, a year ago, of Dutch-Belgian group Fortis, now claims to be the largest private banking firm in the euro zone. BNP Paribas is the seventh largest global private bank and perhaps more predictably, the top private bank in its native France, in Belgium, and in Luxembourg. It now (as of end-March data) has more than 6,500 employees around the world.

BNP Paribas, which at one stage may not have been considered a top-tier wealth management firm, has grown dramatically over the past years including during the economic shakeout. In an age when banks have been sometimes accused of being “too big” - as in the US - this Paris-based firm is proud to stress its reach and size of assets under management.

Francois Debiesse, head of BNP Paribas Wealth Management, recently told this publication in an interview at his Paris offices that his firm is determined to become an even bigger business.

He is convinced the model of a large, integrated banking and financial services group works best for his wealth management business. In that sense, he takes the same view as say, the management of Credit Suisse or Bank of America Merrill Lynch, to name just two. It is a stance that runs counter to some of the current zeitgeist, where the air is thick with concerns about the need to restrain “too-big-to-fail banks”. In fact, Mr Debiesse said the size of BNP Paribas was a key part of its strategy in terms of delivering economies of scale, which ultimately benefited the client.

“That is why for us, the acquisition of Fortis [in 2009] is by no means the end of the story. Our intention is to enter the top five of private banks globally as soon as possible. Through organic growth, we have the capacity to attract and retain talent and we are considering developments. If there are attractive opportunities inside or outside Europe, we will consider them,” he said.

“I am very confident about the future of the business. There is a real will among our top management to develop the wealth management business. Through the experience we have gained over the past 10 years, which have not been easy, we have built a big, safe and profitable business,” Mr Debiesse said.

As recently as 17 February, the bank reminded the market of its market clout. At the end of December, 2009, assets under management at the Investment Solutions unit – in which wealth management is held but excluding Fortis - were €588 billion, a rise of 17 per cent on the previous 12 months. Within wealth management specifically - including the private banking assets of Fortis - total assets stood at €239 billion at the end of December last year.  At the end of last year, the bank had a Tier 1 capital ratio - a key measure of a bank’s financial strength - of 10.1 per cent.

Dual model

The wealth management business is divided into two broad business models: Wealth Management International unit – which covers the various stand-alone businesses, and Wealth Management Networks, which is where wealth management services are supported by the retail businesses in France, Italy, Belgium and other countries.

This dual business model at the wealth management business was an important differentiator for the bank, Mr Debiesse said. The Wealth Management Networks unit, headed by Marie Claire Capobianco, which sits inside the retail banking networks in France, Italy, Belgium and some other nations, meant that these businesses could leverage from the existing local brand and gain access to a vast pool of clients.

In the French retail network, for example, the wealth management business now oversees about €66 billion of assets. In the Italian wealth management business, which is part of BNL, there are about €15 billion of assets. The BNL retail network has 3 million customers, so compared with the French network which serves 6 million customers, the potential for growth on the wealth side is still vast. With the Belgian retail network - acquired in 2009 through the takeover of part of Fortis - the bank added over €40 billion of assets and sees the potential to consolidate further its leading domestic position over the next few years, Mr Debiesse said.

On the Wealth Management International side, meanwhile, these are stand-alone businesses in markets ranging from Switzerland, Monaco and Luxembourg to the UK, Latin America, Asia and the Middle East. The WMI business involves cross-selling opportunities with the corporate and investment bank, he said. In Hong Kong, for example, the bank has been able to gain business from the ultra-wealthy tycoons of the region through a joint effort with its investment banking and corporate banking teams. The CIB division also plays a key role in sourcing wealthy clients in the other regions, he said. “Thanks to our business model, we can handle the sourcing challenge of private banking. It is very clear that for the future, this will be a key differentiating factor”.

Its geographical dispersal means that even if some offshore money migrates back to onshore markets, BNP Paribas is well placed to capture these financial flows, he said. “We have invested for many years in the “new markets” - mostly in Asia, India, Brazil and the Middle East.”

Mr Debiesse said partnership structures were sometimes the best way for BNP Paribas to evolve its wealth management business, to make use of local expertise and brand-name awareness. For example, it has a partnership with Piraeus Wealth Management, in Greece, and Insinger de Beaufort, the Anglo-Dutch wealth management and investment firm.

Strong expansion

Despite the problems faced by many banking groups in 2008 and 2009, BNP Paribas’ acquisition of private banking businesses of Fortis in Belgium enabled the firm to surge up in terms of scale, Mr Debiesse said, adding “2008 and 2009, for us, have been good years.”

“This year [2010] should confirm our position even more. By assets, we are the seventh largest wealth manager in the world,” he said, adding that the size of BNP Paribas was a key part of its strategy in terms of delivering economies of scale, which ultimately benefited the client. Going forward, two broad types of firm are likely to dominate in wealth management: large, integrated banking groups benefiting from economies of scale with a large market reach, and niche, specialist players with specific strengths, such as a number of stand-alone Swiss banking groups, he said.

Long–term view

Mr Debiesse said he and his colleagues are taking a long-term view, an approach that comes from having been a long-serving member of the French banking group. He joined BNP Paribas back in 1971 and was appointed to an executive management role for the French network before heading the division 10 years later. He then served as head of private banking in the BNP Paribas group, which became BNP Paribas Wealth Management in July 2008.

During his time at the bank, Mr Debiesse has seen wealth and financial management fashions come and go; he understands that it is not always necessary or possible for a bank to establish a presence in a new country from the ground up, which is why BNP Paribas has chosen to forge alliances with other businesses. Mr Debiesse said partnership structures were sometimes the best way for BNP to evolve its wealth management business, to make use of local expertise and brand-name awareness. For example, it has a partnership with Insinger de Beaufort, the Anglo-Dutch wealth management and investment firm.

Besides its results announcement and of course, the continued integration of its Fortis business, BNP Paribas has kept the airwaves busy with some hiring announcements, such as in Asia, a key business region. For example, last autumn, it appointed Thierry Dana, the regional manager of Switzerland, Southern Europe and Latin America, as its new chief executive of BNP Paribas Wealth Management for Hong Kong and North Asia, with effect from 1 October. The chief executive of the wealth management operation in Asia-Pacific is Serge Forti, chief executive of BNP Paribas Wealth Management Asia-Pacific. In another move last autumn, Claude Haberer, formerly CEO of BNP Paribas Wealth Management Hong Kong and North Asia, was appointed head of key clients, Asia.

Changing realities

Mr Debiesse is convinced that older business models in private banking must adapt to the changed realities laid down by the Group of 20 nations and their determination to crack down on alleged tax evasion.

“If in the future, you are not ethical in the way you serve clients and in the kind of services you give, you will die.” he said. “By our business model, we can handle the geographical challenge to private banking. It is very clear that for the future, there will be a move from the mature to the emerging, newer markets.”

“We have invested for many years in the “new markets” – mostly in Asia, India and the Middle East.”

Mr Debiesse also said that BNP Paribas has never adopted a “product push” approach to selling clients products from other parts of the bank. He pointed, however, that the model of open architecture had been challenged by the problems associated with the financial turmoil, as clients had discovered that they had been put into products they did not know much about. Such scepticism has been recently backed up by a survey of private bankers by Scorpio, the consultancy. While open architecture retains its advocates, this model of business has taken a few lumps recently. “Without a full understanding by the bank, the banker and the client of the product being sold, you can end up with quite awful things in client portfolios,” he said. “It can be more secure for clients to have products built by their own banks.” He said that the current split of in-house and external products being used by clients, which is about 50-50, could move increasingly in favour of in-house products in the next few years.

That may, of course, sound a rather self-interested statement, but Mr Debiesse has, after all, been at the helm of a business that has risen rapidly up the wealth management pecking order and ridden out the storms of the credit crisis in better shape than many of its rivals.

There is no false modesty about BNP Paribas’ wealth management executives. Big is not just beautiful, but as far as this firm is concerned, it works.