After becoming the largest private
banking business in the eurozone following its formation in May
this year, BNP Paribas Fortis has outlined an ‘industrial plan’ for
the business as a whole, with a key focus on wealth management.
Will Cain reports on the
bank’s plans to get closer to its clients.
Go deeper with GlobalData
BNP Paribas Fortis has outlined a new
business plan which features a key role for private banking,
highlighting the increasing emphasis universal banks are placing on
wealth management.
It will include knitting together the various
divisions of Fortis and BNP Paribas more tightly, creating a one
bank-style approach which aims to overcome the fractures
experienced by clients which come into contact with different
divisions at the bank.
As part of the plans, the Franco-Benelux group
has launched a new private bank for the Belgian market, based on
the acquired Fortis Bank Belgium business, with a heavy emphasis on
an onshore, branch-led distribution strategy, similar to the way it
operates in the French market. It will launch with 35 private
banking branch locations, which will be separate from the retail
outlets, placing it ahead of rivals KBC, Bank Degroof and ING.
The private banking strategy in Belgium is
based around gaining closer proximity to clients, according to
Peter Vandekerckhove, CEO of private banking and retail for BNP
Paribas Fortis in the country.
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By GlobalData“That is also why we have dropped the
threshold for private banking and invested in specialists so we
could accompany the client as they generate wealth by providing
them with additional services,” Vandekerckhove added.
The new business includes a revised
segmentation structure from the original Fortis model, bringing it
more in line with BNP Paribas’ international private banking
business. The new model features private banking services starting
at €250,000 ($368,000), up to a maximum of €4 million.
Anyone beyond that level falls into the bank’s
high net worth (HNW) segment, which features a separate, dedicated
service offering with different relationship managers. Across the
rest of BNP Paribas, its HNW and ultra high net worth services come
under BNP’s Wealth Management business line.
Fortis Bank previously held its private
banking threshold at €1 million, and Vandekerckhove said this rigid
type of segmentation was not the most effective way to serve the
client. The new classification means the number of clients in the
private banking division has increased “significantly” to
66,000.
“We need to be able to line up a client with a
service level that is appropriate,” said Vandekerckhove.
“If a client moves up from €500,000 to €1
million in investable assets in this system it is a much more
seamless service that they receive. Instead of moving from the
retail bank to the priority bank to the private bank, the client is
served all the way by the private bank.
“New investment services become available as
and when they become relevant to the client’s asset size. It means
they no longer experience the fractures in the service between the
different segments.
“Beyond €4 million, which is effectively the
BNP Paribas Wealth Management service, is where we feel we can
really move into a high gear. The difference in service is a much
higher degree of availability of specialists, whether that is in
tax, corporate finance, succession planning, financial planning or
law.”
Products offered include wealth planning,
financial advisory, real estate, financing, discretionary portfolio
management, investment products and insurance. There was also an
opportunity for the Belgian business to benefit from BNP’s global
wealth management expertise, which includes operations across
Europe and Asia, where it plans to become a top tier player in the
coming years.
Having an onshore presence in Europe – and BNP
Paribas becomes the largest private bank in the Eurozone when
combined with Fortis – is also seen as particularly important given
the recent regulatory push to aggressively pursue tax evasion
through offshore investments. Clients are repatriating funds at an
increasing rate and Vandekerckhove said this positioned the
business well to claim these assets as they returned from offshore
centres.
“If you look at the market in Belgium, we have
quite recently had a tax amnesty, in 2005,” he said.
“But you can see legislation is being
developed to move assets back onshore, and we will continue to
profit from that in the Belgian market. It is certainly one of the
advantages of running an onshore model like this.”
The integration is part of an attempt to
strengthen BNP Paribas Fortis’ coverage of clients through improved
segmentation, proximity to the client and expanded product and
service offerings. The former Fortis Bank retail, private and
corporate banking activities are being brought together as “one
Belgian bank”.
This will allow the private bank some
opportunity to garner new clients from retail and corporate banking
divisions and particularly to provide a more integrated service to
business owners. Vandekerckhove said he believed the bank could
refer as much as €12 billion in client assets from the corporate
bank over time, adding to its existing €42 billion assets under
management.
“We are convinced we have a lot of clients in
different units of the bank, so to be able to bring more focus to
the business and offer a more specialised offering is a great
opportunity,” Vandekerckhove said.
“We will be able to invest more in people and
spend more time with clients, which should improve relationships.
That will be hugely important for the clients. Also, by bringing
together more people and clients, we can generate better
profitability.
“Effectively, what the new private bank is all
about is the bringing together of a niche domestic player with a
strong international focus [BNP Paribas] together with the most
powerful network in Belgium [Fortis Bank].”
The integration of the retail and private bank
is expected to deliver synergies of €93 million in the country by
2012, through a combination of cost reductions and revenue
improvements. These are to be driven largely by implementing BNP
Paribas’s CRM platform and private banking model and also through
enhanced back office efficiency. Vandekerckhove hopes these changes
will enable private banking experts and support staff to focus more
on clients. Improvements in technology also allow the bank to fully
deliver on the decentralised strategy it is attempting to
execute.
“We can run a more decentralised model more
effectively now because of the improvements in technology,” said
Vandekerckhove. “You can build your presence through investment in
branches and keep staff informed through video conferencing,
webcasting and conference calls. You can also bring people into the
headquarters if there is a particular need.
“But having 35 private banking centres instead
of five, for example, means you get this greater proximity to
clients with the same level of competence.”
The bank has 800 employees in its private
banking unit in the country, which Vandekerckhove plans to increase
by between 10 and 15 percent in the next year. He said the private
bank now employed more tax professionals in the country than the
main accountancy firms.
