Two heads, so the saying goes, are better than one. This has certainly been the case for BNP Paribas after its dual appointment of Vincent Lecomte and Sofia Merlo as co-heads of their wealth management business in December last year.
Their selections were made with a very clear purpose and set of responsibilities in mind. Both are jointly responsible for the business strategy, business growth and P&L. From there they have split responsibilities. Lecomte oversees international markets, including the Asian markets as well as Middle-East, Eastern Europe and Latin America.
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Merlo remains head of private banking in France (which she has held since January 2010) as well as overseeing its retail-led businesses in its core European markets (France, Belgium, Italy and Luxembourg) and the United States, Turkey, Poland, Germany, Tunisia and Ukraine.
Collaboration at the core
The French bank’s wealth business is in a strong place to grow. It reported 257bn ($320bn) in assets under management (AuM) to 30 June 2012 serving three broad client segments: 250,000 up to 5m, 5m to 25m, and the 25m plus.
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By GlobalDataOnly the 5m plus segments are served in the international markets in the Middle East and Eastern Europe, where BNP doesn’t have retail.
It is this division of responsibilities which underpins BNP Paribas’ strategy, and why the co-head arrangement works so well. Lecomte says the bank’s goal is to capture growth in fast growing international markets such as Asia, Middle East and Eastern European countries, and to leverage its domestic footprint.
This retail-embedded approach is a central strut of BNP Paribas’ strategy and has its genesis in the merger of BNP and Paribas in 2000.
The bank uses its existing domestic network to move its wealthier retail clients, those with 250,000 in assets with the bank, upstream. Equally, the bank uses its contact with entrepreneurs and business owners through its corporate investment bank to introduce it to the wealth management unit.
This retail-led proposition is also why the French bank has taken, what some may consider, the bold step of rolling out its European-style wealth management model in the US, through its subsidiary Bank of the West.
US retail customers are given the choice if they reach the 250,000 threshold, whether they want to continue with the current service level, or move towards a more personalised service.
Breaking the American market
Merlo is not overawed by the challenge of cracking America and says the bank began the project two years ago to convert the brokerage-based style of wealth management most Americans are used to, to a more adviser-led approach.
BNP Paribas has chosen the one adviser approach, where one relationship manager gathers all of the bank’s expertise to give one point of contact to the client.
"We are not going to compete with big American banks through New York on onshore business. We have a good franchise through Bank of the West. We are not going to cover all of the US, but we want to implement what we think should be, and is, really showing that it is successful," she says.
Merlo, who last month attended the opening of its flagship wealth management client centre in San Francisco, says the US subsidiary has seen double-digit asset growth in the past 18 months. Total client assets, including brokerage, stand at $10bn, with a $5bn total when brokerage assets are stripped out.
Bank of the West has a footprint in 15 different US states, but for the moment BNP Paribas is focusing on the wealth management offering in California only with a view to rolling it out further if the strategy is a success.
The retail-embedded strategy has also been implemented in Turkey and Poland. Its Turkish business, which launched two years ago, is operated through its subsidiary TEB Özel with about 2.5bn AuM. BNP Paribas Bankowosc Prywatna is the Polish arm where it oversees about 170m AuM – although Merlo underlines that it is still a work in progress as its local licence was granted only six months ago. Overall Merlo sees US, Turkey, Poland and Morocco all set to deliver double-digit growth.
International appetite
Lecomte is eager to add that double-digit growth is also the expectation in the international markets he oversees, including the Asian markets as well as Middle-East, Eastern Europe and Latin America.
BNP Paribas is on track for a solid year in new assets after net inflows of 7.3bn for the first half of 2012. Asia, as always, remains a key region for the bank where it is looking to build on the success of its key client group in collaboration with the CIB.
The business is centred on Hong Kong, Singapore, China, Taiwan and India where it aims to double AUM from $40bn to $80bn by 2015, and double its number of relationship managers.
Increasing complexity of doing business, and the growing regulatory burden, both local and global, are some of the key concerns for BNP Paribas’ co-heads. Despite these "new constraints", as Lecomte describes them, the co-heads are very positive about the future.
"Our business is growing. We have in the capacity to attract new client assets thanks to the trust clients have in our franchise. So we are quite positive about the growth. This is why we are invested.
"We are investing in teams to expand our teams in Asia, some key markets in Italy as well," Lecomte concludes.
