French lender BNP to boost Africa investment banking business

Sun Mar 3, 2013 2:30am EST

Related Topics

* BNP seeks to expand in fast-growing African mkts

* Lender changes business model in the region

* To focus more on advisory roles than plain lending

* BNP opened South Africa branch last year

By Mirna Sleiman and Dinesh Nair

ABU DHABI, March 3 (Reuters) - BNP Paribas, France's No.1 listed bank, plans to boost its investment banking footprint in Africa as it favors promising growth markets away from the riskier euro zone, its regional head said.

BNP, which is also eyeing an expansion drive in Asia, has changed its regional business model to focus more on advisory rather than just lending for big projects, said Jean-Christophe Durand, the bank's chief executive for the region.

While BNP is relatively well-capitalised after a year-long drive to cut its balance sheet and shrink its holdings of risky eurozone sovereign debt, it is heavily exposed to mature European markets and is under pressure to show investors new paths to growth.

That is prompting the bank to seek emerging markets growth.

"For the bank, Africa will be a growing area for business and we will invest cautiously to seize opportunities, which are in line with the strategy of the bank," Durand, CEO for Middle East and Africa region told Reuters in Abu Dhabi.

The executive sees high potential in Nigeria with its large population, a well-developed banking sector and major investments planned. The bank also sees Morocco as a key market to expand in North Africa, Durand said.

BNP has been hired by Etisalat to advise the UAE telco on a potential bid for Vivendi's 53 percent stake in Maroc Telecom, sources told Reuters last week. The stake is valued at nearly $6 billion in the market.

It opened a branch in South Africa after getting regulatory nod last year. Durand did not give specific details on the bank's hiring plans for Africa.

BNP agreed with UAE's Emirates NBD to sell its operations in crisis-ridden Egypt for $500 million. Its rival Soceite Generale also sold its Egyptian arm to Qatar National Bank.

"We are not retrenching from the region. We want to preserve the global reach we have," Durand said.

CHANGING MODEL

Large European banks, including the likes of BNP, have historically lent heavily to the region but are under pressure to boost their capital ratios in the wake of the euro zone crisis.

The French bank's business model in the region has hence changed and it is no longer just looking to lend for big-ticket projects and is seeking a wider advisory role, Durand said.

"When people used to talk about BNP Paribas in the region, they used to think of it as a project finance bank. The ways of financing the development in the region is going to take another shape," he said.

"What we will change is the way we do business within the new banking environment. We will be advising and we will also match different types of investors with financing requirements."

Infrastructure requirement in large Middle Eastern nations such as Saudi Arabia is expected to be in billions of dollars post the impact of the Arab Spring, prompting government and large institutions to look at a range of financing means.

"Borrowers need to look at investors, such as pension funds (locals, regional or international ones), and also need to look at capital markets," Durand said.

BNP was ranked fifth in arranging debt issues from the Middle East last year, according to Thomson Reuters data.

The bank was mandated lead manager on Abu Dhabi energy firm Taqa's $2 billion two-part bond sale in December and acted as joint bookrunner on IPIC's $2.9 billion dual-currency bond, in November. (Editing by Sanjeev Miglani)

FILED UNDER: