Can BNP Paribas become Europe’s JPMorgan?
French lender thinks it can avoid pitfalls associated with opportunist approach during a crisis
BNP Paribas takes on Wall Street heavyweights
They say fortune favours the bold and BNP Paribas is hoping that will certainly be the case.
The French lender stepped up in recent months when several US banks balked at lending money to European businesses that were reeling from the impact of the coronavirus pandemic.
In the six weeks to the end of May, BNP Paribas worked on more than half of the investment-grade corporate bond issuances across Europe.
The bank underwrote more than €83bn of syndicated loans in Europe between mid-March and the end of May, leading the region with a 16.8 per cent market share. That was up from 7.9 per cent for 2019.
Meanwhile, Wall Street stalwarts like JPMorgan Chase and Goldman Sachs focused their energy on their home market and took a more cautious approach in Europe.
This is all part of a grand plan for BNP Paribas to dominate European investment banking, a brave yet fraught endeavour that has often led to abject failure for many of the bank’s rivals.
Deutsche Bank, Royal Bank of Scotland and Nomura are just a few of the names that have been forced to make a quick retreat. The legacy of those failed efforts continue to haunt their organisations.
So how does BNP Paribas plan to avoid the same fate? Last year it took over Deutsche’s $200bn prime brokerage business, giving the bank a hand-up in the potentially lucrative but risky business of servicing hedge funds.
Then in the first quarter of 2020, the French lender added half a trillion euros of additional loans to its balance sheet.
But history tells us that opportunism during a crisis can backfire — notably at Deutsche and RBS during the financial crisis more than a decade ago. BNP Paribas was one of the groups that emerged stronger than most until transatlantic ambitions were halted in 2014 after it pleaded guilty to violating US sanctions.
This time, BNP Paribas thinks it has done enough to earn the loyalty of its European clients.
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