Analysis: BNP Paribas takes a second swing at Asia growth plan

Thu Mar 7, 2013 6:39pm EST
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By Swati Pandey and Lionel Laurent

HONG KONG/PARIS (Reuters) - BNP Paribas's (BNPP.PA: Quote) second attempt since 2010 to expand in Asia is a bold move by the bank, as it plans a big hiring push at a time when many Western banks in the region are still scaling back.

BNP's Asia revamp is the first sign this year of a broad regional, investment banking growth plan in a part of the world where revenues in the sector have dropped and costs have risen. While other banks are selectively growing certain investment banking or trading units amid broader cuts, BNP's ambitious plan to hire 1,300 bankers over three years in Asia is the most eye-catching move yet.

But in a change from its traditional business model in Asia -- partly forced upon it by regulatory pressure at home -- the bank plans less big corporate lending against its own balance sheet and more indirect financing and advisory work.

That could be difficult, say some analysts, in a region where corporate clients expect their banks to "pay to play".

"If BNP is thinking they are going to get those ancillary businesses without providing the loans, that's wishful thinking," said Ismael Pili, head of financials research for Asia at Macquarie Securities.

The damage inflicted on balance sheets by the eurozone crisis prompted BNP, like its peers, to withdraw parts of its business from Asia in 2011, offloading billions of dollars of loans to other banks in a painful bout of "de-leveraging".

Now, supported by a stronger capital base than its domestic rivals, BNP hopes to build on its traditional strength in trade finance and fixed income and derivatives in Asia whilst others remain hunkered down in Europe.

"We have completed the adaptation process and we're out of the blocks ahead of most of our competitors," said Eric Raynaud, CEO of Asia Pacific, in an emailed response to Reuters.   Continued...

A part of the logo of the BNP Paribas bank is seen on the rooftop of their Paris headquarters April 26, 2012. REUTERS/Mal Langsdon