BNP Paribas’s Fillion sees resurgent Latam growth

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By:
Rob Dwyer
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The French bank is in the process of being granted a banking licence by the Mexican Banking Commission and the Mexican central bank, likely by the end of the year.

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BNP Paribas (BNPP) decided to increase its presence in Mexico in 2018 and has increased its banking team to 40 (from 25 at the end of 2017). BNPP’s US chief executive and CIB Americas chairman, Jean-Yves Fillion, expects the bank will continue to invest and anticipates a banking headcount of around 55 by the end of next year.

“Getting a licence will allow us to develop more products locally, such as trading, securities services and targeted lending that our client base has begun to demand in Mexico,” he tells Euromoney in an interview during the IMF/World Bank Meetings in Washington DC.

Will that be the next step?

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Jean-Yves Fillion, BNPP

“We take a cautious approach to building our presence – I don’t think a ‘build it and they will come’ approach is the right strategy for EM banking,” he says. “A lot of our competitive advantage comes from the reputation we have for staying in the countries that we are in through the good times and the bad. This sustainability of our business can only be achieved by ensuring that we grow alongside the demand from our clients.”

The firm has had a presence in Brazil – BNPP’s largest operation in Latin America, with more than 1,600 employees –  for 20 years as a bank and 50 years in securities services, trading and lending. It is that stability, Fillion says, that gives the bank growth potential. 

The pull back of some international banks in Brazil – such as HSBC, Citi and Deutsche Bank – together with the scaling back of credit provision from public banks, most notably BNDES, presents the bank with opportunity. 

BNPP has recently moved into a new São Paulo office.

Opportunity

Given its set-up and commitment to the country, Fillion says the firm should continue to grow strongly in the coming years. 

“While we have always had a lot of international clients doing business in Brazil, there has been a marked increase in Brazilian multinationals’ cross-border activity in recent years – both in terms of financing and business. This will reinforce our Brazilian business. We have the advantage of being able to help these companies move internationally, given our presence in the Americas, Europe and Asia.”

Fillion highlights the reduction in interest rates as an opportunity for capital markets and institutional investors to focus on other asset classes that BNPP is well placed to serve.

“A couple of years ago, clients would fall off their chair when I predicted a Selic rate of 8% or 9% – and now we are talking about it going to 4% or 4.5%,” says Marcelo Carvalho, head of global emerging markets research at BNPP.

Carvalho gained a reputation as correctly being more bearish on the Brazilian economy in recent years but now believes the country is in a strong position. 

“It’s a different proposition now," he says. "Inflation rates are low and well anchored, the FX is on the cheap side and rates have more room to come down. This will all lead to an accommodative macro environment for growth. But perhaps more importantly, the government is also focusing on micro reforms to help Brazilian businesses grow.”

Carvalho predicts 2% growth in 2020 – in consensus with other estimates.