World’s best bank for corporates: BNP Paribas
The French bank is firmly in expansion mode in corporate banking, on a much more global level than you might expect, and fully grasping how to serve their clients digitally.
Awards for Excellence 2017
When Yann Gérardin, head of corporate and institutional banking at BNP Paribas, decided last year to ask corporate clients how they thought the bank would be serving them in 2025 or 2030, he did so with some trepidation.
Amid the regular predictions of the death of conventional banking in favour of a high-tech, low-touch approach, he might have feared clients would not need a bank like BNPP to do much more than lend to them in 10 years’ time. Fintech X will suffice for cash management, fintech Y for foreign exchange and so on.
Happily for Gérardin, BNPP’s corporate clients don’t think that. Quite the opposite: now more than ever, they envisage needing a bank that they can trust in terms of conduct and financial strength. And they want all that from a firm that can also serve them digitally.
Gérardin says that one way the bank seeks to keep up with the potential lure of external fintech offerings is by co-developing solutions with specific corporate clients, which can then be rolled out to help others. The bank can now offer a blockchain-based internal cash wire system that was developed with two corporate clients and a further 100 co-developed solutions are at proof-of-concept stage.
Most big banks these days claim to make a virtue of doing more with less. Few are chasing vast numbers of new clients, preferring the now-familiar refrain of banking their existing clients more deeply; either by selling them more products and services, or by grabbing a higher wallet share by getting on more of the deals they do. In corporate banking, however, BNP Paribas is firmly in expansion mode as national champions retrench. The bank’s previous strategy had already marked Germany as the key market to put this into action, but its new 2017 to 2020 plan added the Netherlands, the UK and the Nordic region. It also set an objective of adding 350 new corporate clients by 2020.
Meeting those targets means it has to reshape its structure in EMEA. Last year, it created industry groups to sit alongside its existing regional corporate coverage teams and its product groups – and hired managing directors to support the new target countries.
The bank has a strong corporate deal roster in EMEA, as might be expected, but its global footprint lends itself to cross-border work. The bank benefited hugely from being the referral bank for RBS’s global transaction services clients when the UK bank pulled back from the business in 2015. In the last two years, BNPP has won 35 mandates from US companies to manage their cash in EMEA – one notable win was a 10-country cash management and trade finance mandate to support HP’s expansion in Europe.
It can help them in other ways too, including through its fleet leasing business Arval, which is winning mandates from US companies.
The bank advised Siemens on its acquisition of Mentor Graphics Corp in the US and it advised Air Liquide on its acquisition of Airgas, also in the US – a deal that was financed by euro and dollar bonds as well as a rights issue. When FedEx acquired European rival TNT, BNPP was a bookrunner on the bridge finance and the bond takeout, which included taking it to the euro market.
In Asia, the bank has a clear focus on corporate clients over institutions. As well as serving blue chips, it prides itself on its loyalty to mid-caps – some of which it has banked for three generations. It has also brought its clients from elsewhere, such as Veolia in panda bonds – where BNPP was able to leverage the onshore China corporate bond underwriting licence it secured in late 2016 – and AT&T in formosas.
Ford Credit Europe (FCE) is a good example of the kind of client that BNP Paribas can serve in multiple ways in multiple jurisdictions. Revolving credit commitments are at the heart of the relationship, inevitably, as are the firm’s needs in asset-backed securities and conventional debt capital markets.
Nick Rothwell, FCE’s CEO, says that the differentiator with BNP Paribas is the bank’s willingness to go the extra mile. When FCE asked itself in the last 12 months if it was structured appropriately compared with other captive auto finance companies, it decided it needed external help.
“We asked [BNPP’s co-head of corporate coverage, EMEA] Chris Kramme if the bank would have the resource to do a day’s brain dump with us,” says Rothwell. “The team they sent in was first class.”
BNPP has long preferred incremental improvements to sudden overhauls – “permanent adaptation”, as Gérardin calls it. Given the bank’s range of services, it is an approach that suits it well. And judging by BNPP’s performance over the last year, it also suits its clients.