BNP Paribas sets out Asia Pacific growth plans

BNP Paribas has set out an ambitious plan to turn its expertise, connections, technology and scale in global asset management and custodial services into an important part of the group's revenue-boosting drive into Asia.

Speaking at a media briefing in Sydney last week, Didier Mahout, BNP Paribas chief executive officer for Australia and New Zealand, conceded the only way to remedy the group's reliance on revenue from Europe and grow its business was by diversifying into other regions.  

The path into Asia is clear, as BNP already has banking licences in 14 different countries, some of them for over a century in the case of India, China and Australia.

"That said, we are too small in Asia, and our ambition has been very clearly announced to the financial community and to analysts, and that is to grow our revenue in the region by 50 per cent within three years," Mahout said.

Expressed in hard targets, that equates to doubling revenues in the region to US$3.8 billion. And to achieve this BNP will need to hire another 1300 people, in addition to the 8000 the bank already has in its Asia Pacific businesses - not counting the "thousands" working in joint ventures with the BNP group in markets such as India.

In his opening remarks, Mahout singled out the bank's securities and custodial services group as one crucial part of this strategy. "We want to grow our securities business because it does not require a lot in the way of equity from the bank's shareholders, but is quite revenue accretive because the business is about delivering service and generating flows and liquidity," he said.

"We will be looking to foster a greater business relationship between all the parts of the bank in Australia and in Asia, in particular between the securities business and the rest of the bank."

BNP Paribas Securities Services is a global custodian with over US$9.4 trillion in assets under custody. In Australia, BNP has some A$380 billion in assets under custody and administration, which ranks it as the third largest player in the local market, albeit with a market share of just five per cent. The business employs 400 people directly.

Ian Perkins, recently named as acting head of BNP Paribas Securities Services in Australia and New Zealand, speaking at the same briefing, said that in addition to growing the core asset servicing that characterises traditional custodial work, BNP was looking to expand into other related services.

Topping his list are the provision of investment risk analytics (advice on how to manage risks from a whole of fund perspective) and helping clients, which in Australia comprise mainly super funds, to report to their members and to regulators.

Perkins explained that the reason for this change of strategy had, in part, to do with the trend of convergence among many of the larger superannuation funds and investment managers, in an industry which has seen large-scale asset management brought in-house.

This has forced securities service providers to re-think revenue models, as their client super funds are just as much asset owners as asset managers.
 
"For us, it's about providing access to global scale and to technologies that allow our clients, the asset managers, to execute their strategies in more effective ways," Perkins said.

Last week, BNP's custodial services and securities business was given a further fillip with the 2014 Global Custodian Agent Banks in Major Markets survey naming BNP's Australian operations in top spot - ahead of the local businesses of global rivals Citi, HSBC, JP Morgan and the largest domestic player, NAB, respectively - despite BNP's relatively small market share.

The report noted, in part, "it is clear that BNP Paribas is beginning to make serious inroads into the Australian market. By outperforming in the survey, it shows that it is effectively managing both growth and existing client services and is well positioned to expand further."