As some of its European competitors have suffered, BNP Paribas is working to expand its dealmaking business in the US as part of a larger strategy to dominate the investment banking market.
According to Renaud-Franck Falce, global head of capital markets at BNP Paribas, the French bank is expanding its sector coverage, investment grade finance, syndicated loans, and securitized products in the US as well as developing a team of equity capital markets bankers in New York.
Our franchise in the US will continue to grow, as work is already being done on it. We are satisfied with market share growth across the board, especially in leveraged finance and investment grade bonds, he told Financial News. “But we can do more, and that’s our ambition,” the company stated, “not just to support US clients, but also to help our European and Asian clients access the largest funding markets as relevant for bigger deals.”
In order to launch its US ECM unit, BNP Paribas poached Evan Riley from UBS in May. The bank is presently looking for a group that will eventually consist of 10 bankers. In its capital markets division, the French lender employs around 200 people in the US, compared to 700 in Europe, the Middle East, and Africa. It employs about 3,500 people in the US.
We are expanding in areas where we were less significantly present, such as ECM, and staffing up some of our teams in the US. “While there aren’t as many IPOs as we’d like to see these days and some may wonder if this is the right time, I’d argue that it’s more pertinent than 2021, when the majority of players were preoccupied with IPO execution, and that now is in fact the right time to recruit talent prepared to advance our development.
BNP Paribas has been vying for market share in investment banking for the past five years by diversifying beyond its traditional expertise in debt markets and into ECM and M&A. However, the majority of the effort has been concentrated on its important European market, where it presently ranks fourth by revenue, per data provider Dealogic, after coming in ninth last year and sixth in 2021.
The most recent actions are a part of a strategy to grow outside of its native markets, with the US as a primary target. In addition, Erin Brown is moving from London to New York to run its leveraged finance division, while Vanessa Dager was hired by BNP Paribas from Wells Fargo to head its US consulting division.
At a time when several competitors have scaled back, BNP Paribas is one of a select group of European companies that is raising its objectives for its investment banking sector. The acquisition of Credit Suisse by cross-town rival UBS offers numerous players the chance to increase their market share, especially in the US where the Swiss bank was one of the most influential European dealmakers.
To expand its footprint in the UK, Deutsche Bank spent £410 million for City broker Numis and added 50 senior bankers, mostly in M&A, to its dealmaking division. As part of its growth into investment banking, Santander is employing up to 150 bankers in the US and the UK. Following Credit Suisse’s hasty marriage to UBS, both companies hired key dealmakers from that institution.
Despite hiring, BNP has not been as aggressive as some of its European competitors, according to Falce, who claims that “dozens” of bankers have joined the company since 2021.
Falce asserted that BNP Paribas is less interested in stealing domestic clients from dominant Wall Street banks than it is in expanding its business with clients with headquarters in the Middle East and Asia who may trade in the US.
According to him, this could indicate a need for finance, more strategic equity agreements, or consultancy work. The bank could expand its US sector teams and its section devoted to energy transition deals in addition to ECM, DCM, and securitized products.
The objective is not to displace local US competitors in their native markets, according to Falce. “We want to be a significant player, assisting domestic and international US clients in their strategic decisions and assisting our European and Asian clients in entering the US markets.”