One of the bank's wealth management co-heads recently spoke to this publication about its Germany business strategy, among other topics.
BNP Paribas sees
big opportunities in Germany, Europe’s largest economy, but
prefers to take the organic growth route, one of the French
bank’s wealth management co-heads says.
Germany contains a number of big players, such as Deutsche Bank and Commerzbank. Both of these firms have had their struggles – Deutsche has seen new management come in to restore its fortunes.
There are other operators at work, as well as a long tail of dozens of small, private banks in a heavily fractured market. (This publication chronicled some of the players in the German market here.) The country’s famed Mittelstand sector of small- and medium-sized businesses continues to drive growth, and there are opportunities for a new kid on the block.
That is certainly the aim of Vincent Lecomte, co-chief executive of BNP Paribas Wealth Management. There have been a few stories going around about how the Paris-based lender is looking closer at the German market, and, inevitably perhaps, talk of M&A comes up. WealthBriefing asked him how he intends the bank to expand in Germany.
“We believe we can grow in Germany organically and that remains the priority,” he replied when he was interviewed at his offices in central Paris.
“We want to accelerate the penetration of our services to [German] entrepreneurs,” Lecomte said. “We believe we can bring value to entrepreneurs. We are looking to develop a local presence in Germany, such as in Dusseldorf, Hamburg, Frankfurt and others,” he continued. “Our offerings have been very well received.”
The bank intends to recruit a substantial number of people, he said. As reported here in June this year, BNP Paribas wants to add as many as 150 staff to its private-banking operations across German cities over the next three years. The wealth management push is part of a bigger drive by BNP Paribas to boost its annual revenue in Germany by about eight per cent to reach around $2.3 billion, by the end of 2020.
Of course, a key test will be whether such added recruits put sufficient new money on the board. While bankers might say that they are not in a numbers game and not asset gatherers, harsh rising compliance costs and rising client expectations exert their own Darwinian force. And BNP Paribas is one of the big-hitters in the market. According to figures as of 30 June, reported last week, within the wealth management arm the group held €373 billion.
BNP Paribas certainly is, as its behaviour shows, willing to open its wallet when circumstances appear to be right. In February this year, for example, BGL BNP Paribas – part of the French banking group – agreed to buy the Luxembourg-based part of the Dutch group ABN AMRO Bank.
Lecomte said that his bank’s comprehensive offerings plays to the wealth management side’s strengths, particularly as so many of the high net worth and ultra-HNW clients in a Germany are business owners who will need services such as corporate finance as well as tools to oversee their liquid wealth.
“Mittelstand businessmen and women are exporters, remember, so they need all the corporate services to support them,” he said. Areas where such clients are also hungry for solutions is real estate, and the bank has strong capabilities there via its BNP Paribas Real Estate Investment Management business. (In Germany, the bank has one of the largest real estate portfolios, at €52.6 billion ($61.6 bilion.)
“We are the first non-German bank in Germany with all the banking businesses being represented – insurance, consumer credit, online banking, investment, wealth management and investment banking,” he said.
A period of intense study of what German wealthy clients want has left Lecomte with certain clear impressions: “They love private equity and say `we need credit’ and `real estate’s a really important asset class’.”
With a footprint in Belgium, Italy, Luxembourg and Germany, this French bank is already pushing hard at a west European strategy. However, Europe is only part of the formula. BNP Paribas is, in contrast to its main French rival, Societe Generale (which sold its private banking businesses in Asia) very committed to doing business in Asia. Its assets under management in Asia have surged to around $100 billion, and BNP Paribas is seeking to boost Asia wealth assets to around $120 billion by 2020.
“In Asia, all of our growth has come from organic growth,” Lecomte said. “Of course, this growth takes time and we spend a lot of time on training,” he said. While the bank concentrates on bringing in experienced bankers in Asia, training and career development is a “top priority” for the bank, he said.
Finally, no discussion of wealth management these days is complete without touching on impact investing – the approach of putting money to work to achieve non-financial as well as monetary rewards. With its focus on philanthropy in recent years, the impact investing zone is a natural one for BNP Paribas, Lecomte said. “We’re accelerating in this space,” he said.