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View the Euromoney 25 |
What exactly is BNP Paribas?
Is it one of the last men standing in pan-European commercial banking?
Is it parochial in outlook or more global than you might think?
Is it a lender of first resort and strategic adviser as afterthought?
Or, after years of delivering on a conservative business model, is it now at an inflection point, making a leap into new territory?
It might just be all of these things. The bank has a reputation for being staid, but there are signs that it is shaking itself up, albeit modestly and without ceremony, as is the style of long-serving chief executive Jean-Laurent Bonnafé. What will that look like?
The bank might have spent much of the year discussing its new strategic plan for 2020, with its four new areas of geographic focus – Germany, the UK, the Nordics and the Netherlands. But a much less prominent development might hold the key to understanding where BNPP has come from and where it hopes to get to.
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Jean-Laurent Bonnafé |
As so often in banking, it starts with a hire, in this case James Seagrave from Jefferies. He is now BNPP’s head of financial sponsors coverage – a role that did not exist before. This is a bank that has lent to roughly a quarter of the sponsor-owned companies that have been floated in Europe in the last three years. Of those IPOs, it was bookrunner on about half, but global coordinator on just a tiny handful.
It is an example of how the bank has historically not taken full advantage of its lending clout. But after a patient reorganization of the corporate and institutional bank under head Yann Gérardin, the hiring of Seagrave is an indication of the kind of firm that BNPP now aspires to be.
When coupled with notable external hires in equity capital markets, such as Andreas Bernstorff and Igor Donnio, it is clear that the strategy from now on will be to position a more strategic overlay onto what is already a formidable lending and transaction banking platform.
Treating financial sponsors as clients in their own right, rather than simply extending balance sheet and hoping for the occasional piece of ancillary business, is a logical next step in the bank’s development into a more full-service firm.
It also illustrates Gérardin’s desire for a more joined-up approach overall.
BNPP is a mammoth organization: that brings scale and breadth but also the risk of a lack of coordination that can see it miss out on business it would be well positioned to win if it spent more time on coverage.
It is worth remembering also the strong base onto which this overlay is being bolted. The bank has posted steady increases across most of its businesses and delivered on almost all of the targets of its previous strategy plan. Its updated plan to 2020 aims to capture the next level of opportunity.
It is a similar story with the firm’s geographical reach.
The move to strengthen in the UK in particular, is long-overdue given the bank’s historic presence in the country. It is a strategy that has played out to good effect in Germany and the bank ought to be able to leverage its UK strengths in consumer finance, real estate and securities services to benefit the rest of the corporate and institutional bank simply by making it a clear objective.
The ambition goes further than its home patch of Europe, however. BNPP recently announced a plan to extend its investment banking product suite, in particular M&A advisory, to its commercial banking clients in Bank of the West in the US.
In Asia, the firm is still present in more markets than one might think, and not just through its surprisingly varied mix of stakes in local institutions. It has 13 banking licences in the region, plenty of capital to put to work and a decent securities services presence.
There is plenty more to be done, but a good portion of the opportunity will depend on the bank’s willingness to be a bit less like BNP Paribas.
The year 2017 has shown its eagerness to give that a shot.
