* Investment bank to focus on growth, not cutbacks
* Rivals face "three years" of deleveraging ahead
* Will be able to adapt to French banking reform
By Lionel Laurent and Matthieu Protard
PARIS, Nov 21 BNP Paribas, France's
No. 1 bank, is confident it can profit from rivals' distress
after a year of cutting assets and staff to meet tougher
regulations, its head of corporate and investment banking said.
At a time when lenders such as Deutsche Bank,
Royal Bank of Scotland and UBS are still
slashing jobs and overhauling business models to adapt to costly
Basel III rules that crack down on risk-taking, BNP is moving
its focus to growth, he said on Wednesday.
"We have turned the page from the past year's efforts to cut
debt," Alain Papiasse told reporters at a media event. "For our
rivals, who are forced to take action to boost profitability,
however ... there are three more years of deleveraging ahead."
BNP and domestic rivals Credit Agricole and
Societe Generale have all completed year-long drives
to slash debt by dumping assets and cutting jobs, after market
panic in the summer of 2011 deprived them of cheap funding.
Citing BNP's capital ratio of 9.5 percent under Basel III -
one of the highest in Europe - and an investment-banking
cost-to-revenue ratio of 62 percent in the first nine months,
Papiasse said the bank could now steal market share from rivals.
UBS's cost-to-income ratio in investment banking is closer
to 90 percent, while Credit Suisse's is more than 80.
Among the growth areas being targeted, Papiasse cited
corporate debt issuance, cash management and lending
partnerships with institutional investors like insurers.
He also cited niche areas of trade finance, such as flows
between China and the Middle East, where he said there were only
four other serious competitors: Citigroup, Deutsche Bank,
HSBC and Standard Chartered.
Papiasse said BNP still needed to keep growing long-term
corporate deposits to prepare for Basel III and also to await
more detail about French draft banking reforms due in December.
The government has said the reform will require banks to
split risky proprietary trading from activities deemed useful to
the economy. Sources earlier told Reuters that banks' crucial
business of market-making would be spared.
If the final law sticks to this line, BNP can adapt to the
reform, said Papiasse. Proprietary trading accounts for 1
percent of investment-banking revenue, which for the year 2011
would put it around 100 million euros ($128 million).
"Given that we have few speculative activities, if we have
to put a tiny bit into a separate entity with more capital ...
We will adapt," he said.
Regarding possible bans on high-frequency trading and prop
trading of commodity derivatives, Papiasse said the bank's
trading was firmly in the market-making category and its
commodities activities focused on client products like hedging.
"If the target is speculative commodity derivatives trading,
I can easily live with that," he said.