BNP Paribas Wealth Management mixes European flavours with French fare

As far as private banking is concerned, the growth story at French leader BNP Paribas, which boasts more than €265bn in client assets, has been fuelled by a series of key mergers.

The first was the union between two French giants at the turn of the millennium, which brought together BNP’s retail branch network with Paribas’ wealth management capacity.

Then in 2006 came the purchase of BNL in Italy, bringing in significant new assets, while allowing the investment engine of BNP Paribas Investment Partners to create a series of new products for a previously under catered-for market.

But perhaps the most defining moment in the bank’s history was the post-crisis merger with Fortis, completed by BNP Paribas in 2010, which doubled the size of the wealth management franchise.

“Fortis clients had been badly hurt and things had been quite difficult for them; BNP Paribas gave them stability and some safety and we were able to leverage on the offering of our organisation,” recalls Sofia Merlo, co-head at BNP Paribas Wealth Management, talking about how her bank stepped in to help bail out the beleaguered Benelux lender, itself a victim of the failed all-or-nothing three-way take-over of ABN Amro, together with Royal Bank of Scotland and Santander.

There were questions asked over the efficiency of the wealth management operation at Fortis, she remembers. “Two people were serving each client. At BNP Paribas, each client is served by a single relationship manager.”

Having managed to keep the majority of BNL clients after the 2006 merger, through new product and improved service offerings, BNP Paribas built on its experiences in Italy to present investment opportunities in private equity, credit, real estate and even vineyards to the newly-inherited clients from Fortis.

There was also a conscious decision taken not to freeze out the key strength of Fortis: its strong brand and relationships with clients across the Benelux region. In Belgium, for instance, the institution was renamed BNP Paribas Fortis Wealth Management, to make sure the more prominent cross-border identity of the French bank did not subsume a favoured, if ill-starred, local entity.

“We need to be close to clients and show understanding, rather than just bring them a big brand which is not well-known everywhere,” says Ms Merlo.

If anything, the bank is trying its best to play down its Gallic origins, with a growing sense in the financial world that Paris is an increasingly parochial financial power, better known for its supremacy in food, fashion and luxury goods.

“When you compare us with other French banks, we are actually much more European, with a strong footprint in Belgium and Italy,” says Ms Merlo’s co-head Vincent Lecomte, who also confirms that BNP Paribas is the leading domestic French wealth manager, overseeing client assets of Ä73bn in its home market.

“We don’t consider ourselves as a French bank,” he says, referring particularly to differing perceptions in Asia, where he spends much of his time building the business to a growing clientele in developing economies.

“In Asia, they pay attention to solidity and how we can bring European expertise to them,” he says. “In Hong Kong and China, they see luxury as more of a reference, so our European background is more of an advantage.”

Increasingly, the investment strategists relied on by the bank are no longer located in Paris, but more likely to be found in London, Brussels and Asian capitals. And while many private banking competitors – particularly Swiss banks – have struggled to be competitive in high-labour cost Far Eastern economies, Mr Lecomte maintains this is not the case with his wealth franchise.

“We make profits in Asia; we manage our business the same way we manage it in other locations:  if we invest, we need profits.”

There is no doubt however, that the cost of relationship managers – often of variable quality – is much higher in the East than in BNP Paribas’ home markets of Benelux and Italy. “We invest our profits in our people,” he says. “This approach is part of our DNA. We are not in the habit of looking for mercenaries, so our recruitment process sometimes takes longer than the others.”

A tougher regulatory environment, including a US-influenced Swiss reversal on secrecy and tax-avoidance, a strict compliance regime in Singapore and the enforced commission-free sales practices spreading from the UK to other European jurisdictions are heralding a new era in education of private bankers, says Ms Merlo. Indeed, this may well result in several new chapters of the merger story, which has played such a central role in building up her business.

“These measures could prove the death of a certain type of private banking model, but not ours,” she says. “Overall, we believe the changes will result in further consolidation, as some actors will not have the capacity to adapt.”