BNP puts its money where its mouth is
Ever since Baudouin Prot, chief executive of BNP Paribas Group, announced plans for a e5bn – e6bn spending spree in February 2004, BNP Paribas Private Bank has energetically pursued a mergers and acquisition growth strategy in a number of key markets. Over the last 15 months it has acquired over e4.47bn in assets in a significant number of private banking-related deals. More are likely to follow.
Domestically, BNP Paribas Private Bank is already a powerhouse. Its French private banking business accounts for e40bn of the private bank’s total e101.1bn in assets under management, ranking it number one in France. It is unsurprising that BNP is focusing on acquisitions in other markets.
The first of the foreshadowed deals was in March 2004 when BNP Paribas’s Miami-based subsidiary, BNP Paribas Investment Services, picked up over 900 non-US high-net-worth clients of Banca Intesa subsidiary, Banque Sudameris. This contributed some $700m (e572m) of assets under management.
The focus moved to the European market. In June 2004 BNP Paribas Private Bank (Switzerland) acquired Société Monégasque de Banque Privée, the Monte Carlo-based private bank, which added e630m in assets under management and 58 employees. That June it also acquired Bank von Ernst (Monaco), formerly part of the Coutts Group, to add a further e360m in assets under management and 24 staff.
The next deals, announced in January 2005, centred on the Swiss market. In the first, clients of Citigold International Wealth Management in Switzerland were transferred to BNP Paribas Private Bank (Switzerland), adding a further SFr2bn (e1.3bn) of assets under management as well as Citigroup relationship managers. Then the bank acquired Caixabank Banque Privée (Suisse). This brought SFr460m in assets under management, including the Luxembourg-based Caixa Funds range.
BNP then dipped a toe into the promising Turkish market with the acquisition in February of a 50 per cent stake in the holding company of Turkish bank Turk Ekonomi Bankas. The aim is to develop the Turkish bank’s wealth management, asset management, retail and investment banking businesses.
BNP then moved on to the Netherlands. In April 2005, it announced the acquisition of Nachenius, Tjeenk & Co., the Dutch private bank, with e1.3bn of assets under management. And the spending continues; the latest deal, announced at the end of June, is the acquisition of FundQuest, a US wealth manager, through Paribas Asset Management. The deal will enable BNP Paribas to move into managed accounts in the US, a segment where it has identified strong growth potential.
While the acquisitions made by BNP Paribas since 2004 have already boosted private banking assets by over 4 per cent, some believe that the group is now looking for larger global prey. BNP Paribas has been linked to possible deals with a number of Continental banks, which would be in keeping with its European onshore strategy. Germany would be a logical market for BNP’s next deal. Commerzbank is still available although competition may be fierce as a number of other large banks are thought to be interested as well.
An acquisition in the Far East is also a possibility. In November 2004, the bank announced plans to grow its Asian private banking business by 15 per cent over three years, focusing on Singapore, Hong Kong and India. More recently, Francois Debiesse, chief executive of BNP’s private banking business, announced an even higher projected growth rate for India of 30 per cent over three years. No matter where the bank decides to write its next cheque, BNP Paribas’ private banking growth strategy appears to be as aggressive as any other player in the market.
Ted Wilson is a consultant at wealth management strategy think-tank Scorpio Partnership
