BNP Paribas CIB bets on profitability over revenues
When BNP Paribas announced its adaptation plan last year the corporate and investment banking unit was squarely in the firing line. Revenues are down but profitability is resilient – something that CIB head Alain Papiasse argues makes it better positioned than its peers.
"I don’t see that there is a risk today that we will lose money – even in an extreme scenario." This is a bold claim and one that not many heads of corporate and investment banking would be in a position to make. But Alain Papiasse at BNP Paribas is confident that the balance-sheet restructuring that the bank has recently undertaken puts him in this position. Papiasse became deputy chief operating officer at the bank in December 2011 along with Jacques d’Estais, head of investment solutions. "But this has a cost," he concedes when Euromoney meets him at the bank’s Rue d’Antin offices in central Paris. "We have the lowest VAR of all in our peer group."
The short-term dollar-funding crisis that hit all the French banks in the second half of 2011 prompted balance-sheet rebalancing across the sector. But BNPP seems to have tackled the task with particular gusto. The funded assets of the corporate bank have swiftly been cut by $65 billion – well ahead of schedule – and short-term borrowing from US money market funds was down to $9 billion by the end of August. This is fairly drastic stuff but is integral to BNP Paribas’ aim of achieving a 9% fully loaded Basle III common equity tier 1 ratio by the end of the year, well ahead of its peers.