May 16, 2013 / 12:40 PM / 4 years ago

BNP Paribas to spend 80 mln euros on new online bank

* Hello Bank targets 1.4 mln customers by 2017

* To launch in Germany and Belgium first

PARIS, May 16 (Reuters) - BNP Paribas, France's No. 1 listed bank, will spend 80 million euros ($103 million) this year to launch a Europe-wide online bank as lenders cast their net wide for funding in a slowing economy.

BNP said on Thursday its new brand, "Hello Bank", would aim to gain 1.4 million customers by 2017 and would first launch in Germany and Belgium before arriving in France and Italy later this year.

Online banking is seen as a more cost-effective way of bringing in customer deposits than physical branch networks, which are traditionally a strong revenue source for French banks but which face cutbacks as recession bites.

While BNP is very exposed to mature European markets and owns major subsidiaries in Italy and Belgium, it has only recently begun a fresh push for German business.

"This is above all a plan to get new customers," said BNP Chief Operating Officer Francois Villeroy de Galhau, who gave few financial details but said the new brand would aim to at least break-even in each country within four years.

There was little in the details BNP did give about the new bank to suggest how it will stand out from the crowd in Europe's biggest banking markets, including among Germany's 80 million consumers.

The company would not say what savings rates Hello Bank would offer but the brand is offering one-off cash gifts to new customers and a small return - 0.25 percent - on some current accounts.

Europe's banks are seeking to bolster their balance sheets and cut costs as the euro zone struggles with recession and as new rules on minimum solvency and funding requirements - designed to make banks safer after the crisis - come into force.

French banks like BNP and Societe Generale have pledged to keep cutting costs at home while gathering deposits and boosting business abroad.

EU online-bank users increased by 15 percent between 2006 and 2010, according to Deutsche Bank research, with France and Belgium among the top-three increases with more than 20 percent.

Despite the potential growth on offer, there is also plenty of competition. Beyond the many online brokers and banks currently offering accounts, Deutsche Bank says tech giants like Google, Amazon or Apple may start offering standardised financial services. ($1 = 0.7775 euros) (Reporting by Lionel Laurent; editing by Patrick Graham)

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