BNP Paribas Targets Asia As Europe Rivals Pull Back
25 May 2012 - 3:02PM
Dow Jones News
France's largest bank is taking tentative steps toward boosting
its reach in Asia at a time when the sovereign debt crisis closer
to home is prompting rival European lenders to cut back exposure to
the region.
BNP Paribas SA (BNP.FR), the biggest lender in France by market
value, this week launched a cash-management service in Australia
targeting multinational companies moving operations to the country,
and for local clients with international activities.
Like many of its peers, BNP Paribas has been forced to reassess
its global expansion plans, as deteriorating economic conditions in
Europe have necessitated some de-leveraging of their balance
sheets. The French bank says it has already expanded to 12
countries in Asia-Pacific since 2010, and that it aims, despite a
recent slowdown in China's economy, to become among the region's
top-four players in cash-management services.
"In spite of the fact that some of the large countries in Asia
Pacific have slowed, the growth is still pretty strong," Pierre
Veyres, BNP Paribas's Global Head of Transaction Banking told Dow
Jones Newswires in an interview. "Although there are some
short-term bumps in the road, this is a long-term plan."
Without providing hard numbers, Veyres said that he expects
"double-digit growth" this year in the lender's Asia-Pacific
transaction-banking business, which includes global-trade,
structured-finance and correspondent-banking, as well as cash
management. That quantum of growth would be in line with the
previous two years, he added.
The Australian cash-management business, which handles money for
corporations, will start small, with only five client-facing BNP
Paribas staff allocated for the initial rollout.
Euro-zone banks are cutting their international exposure having
embarked on a massive lending spree to developing countries. The
lenders have cut their involvement in Asia by an estimated 30%
since the collapse of U.S. investment bank Lehman Brothers in
September 2008, but still have around $440 billion exposure to the
region's emerging economies, according to the Asian Development
Bank.
Adding to concern over the health of Europe's embattled banking
sector was data released this week that showed business activity in
the euro zone contracted at its steepest rate in nearly three years
in May, and growing speculation Greece may be forced to exit the
euro zone.
Credit Agricole SA (ACA.FR) has already said it would cut 2,350
jobs globally and retreat from 21 of the 53 countries it operates
in, while Societe Generale AG (GLE.FR) is reducing its worldwide
headcount by 1,600 to focus more on its home markets.
"We want to be a fully-fledged investment bank for our core
clients in Europe," Didier Valet, head of Societe Generale's
investment banking arm, told the Financial News in February.
BNP Paribas hasn't managed to avoid cutbacks of its own. In
November, the bank said it was shedding almost 1,400 jobs at its
global corporate and investment-banking unit, and that it aims to
cut EUR70 billion worth of risk-weighted assets from its balance
sheet.
Still, the bank remains committed to expanding in Asia's growing
markets at a time when European growth looks to be stagnating.
In Australia, the French bank has been targeting clients in the
resources sector, in addition to infrastructure developers and
industrial companies. It intends to start offering cash-management
services in addition to existing supply-chain and trade-finance
products.
At the moment, the bank deals largely with the top 100 companies
listed on Australia's stock exchange, including Qantas Airways Ltd.
(QAN.AU), BHP Billiton Ltd. (BHP.AU) and Brambles Ltd. (BXB.AU),
said Fernando Pacheco, head of its Australian cash-management
business.
"We're seeing more and more multinationals that haven't got a
footprint here want to come in," he said. "There's no doubt that
over the last 10 years, the Australian economy has become more
global and more important to global trade."
BNP Paribas reported consensus-beating results for the first
quarter of 2012 earlier this month, with net profit rising to
EUR2.87 billion in the three months ended March 31, up 10% from a
year earlier, beating analyst forecasts of EUR2.5 billion in a
FactSet poll.
BNP Paribas' Veyres said Europe remained a key focus, despite
the region's troubles.
"Europe as a whole is an economy growing less than other parts
of the world, but still there is growth in the largest countries,"
he said.
-By Caroline Henshaw, Dow Jones Newswires; +61-2-8272-4689;
caroline.henshaw@dowjones.com
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