Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
BNP Paribas has agreed to buy the private banking operations of HSBC in Germany as it accelerates its expansion drive in a deal that will grow its exposure to wealthy entrepreneurs in Europe’s biggest economy.
Flush with cash from the $16.3bn sale of Bank of the West in the US that closed last year, the Eurozone’s largest bank has been extending in areas such as wealth and asset management.
Although not disclosing financial details, the bank is seeking to double its wealth assets under management in Germany to more than €40bn with the acquisition, which is set to close next year.
The expansion contrasts with HSBC, which is selling off marginal businesses as it seeks to refocus under new chief executive Georges Elhedery, who has made cutting costs a priority.
Citi analysts said in a note the deal underscored BNP’s push to grow its presence in divisions linked to savings, adding that it calculated the transaction would increase BNP’s overall assets under management in wealth by 6 per cent.
Vincent Lecomte, BNP’s head of wealth management, told reporters the acquisition would “rank us among the top players locally” in Germany and would help the bank better target high net worth individuals linked to local companies with more regional offices and staff.
“We know Germany is a very competitive and fragmented market,” Lecomte added.
BNP executives declined to comment on other plans in Germany, especially in light of rising speculation over a potential merger between Italy’s UniCredit and Frankfurt’s Commerzbank.
The Italian bank disclosed a 9 per cent stake in the lender two weeks ago, turning it into Commerzbank’s second-largest shareholder after the German government.
BNP earns a chunk of its income in its corporate and investment bank from German clients. They make up 30 per cent of the unit’s business.
The French bank says it can help wealthy customers by linking up its many divisions, including real estate, after its drive to increase its investment banking presence across Europe in recent years.
BNP’s private bank assets stood at €446bn at the end of June, making it the biggest in the sphere in the Eurozone, although less than Swiss rivals, which were also reported to be circling HSBC’s German unit.
In August, BNP announced a €5.1bn deal for the investment management arm of insurer Axa, its largest acquisition using cash from its sale of Bank of the West.
In addition, it is spending money from its US sale on IT investments and share buybacks as well as earmarking areas such as insurance for growth.