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BNP Paribas banks on China's future

By Bian Ji (China Daily)
Updated: 2008-07-14 15:13

BNP Paribas, France's biggest bank, is accelerating its growth in China, the world's fourth-largest economy.

A recently completed restructuring project illustrated the bank's ambitions when it converted its branches in Beijing, Tianjin and Guangzhou into branches of BNP Paribas (China) Ltd - an existing wholly owned subsidiary of the bank - while its Shanghai branch was retained as a foreign currency wholesale branch under the BNP Paribas Group.

To implement the conversion, the bank increased capitalization of BNP Paribas (China) Ltd to 4 billion yuan ($581.4 million), putting it on a level playing field with most of its foreign competitors.

"This is a significant milestone in our business development in China and we believe the conversion will be a powerful force propelling our development in the mainland market where we have already seen exponential growth since China's accession to the WTO," said Mignonne Cheng, chairperson of BNP Paribas (China) Ltd.

With the move, the French bank can offer a greater range of services in China.

As the first overseas bank to obtain approval to offer electronic solutions in foreign currencies, BNP Paribas will soon be able to provide the service in local currency.

To enable the expansion, the bank's China subsidiary plans to increase its local staff to 650 by 2010 from its current 325, said Francois Cristofari, CEO of BNP Paribas (China) Ltd.

Sustained growth

BNP Paribas opened its first office in China in 1860. Among the first overseas lenders to establish a presence after modern China's reforms began, it opened a branch in Beijing in 1980.

In 1993 the bank formed a 50-50 joint venture in Shanghai with the Industrial and Commercial Bank of China (ICBC). A decade later, ICBC transferred its equity to its French counterpart and the operation was renamed BNP Paribas (China) Ltd.

Taking a 19.2 percent stake in Bank of Nanjing in 2005 was another strategic move by the BNP Paribas. Its share dropped to 12.6 percent after the Nanjing bank's initial public offering in 2007.

BNP Paribas also has an asset management firm in Shanghai jointly invested by Shenzhen and Wanguo Securities.

Corporate and investment banking, asset management and services and loans will be the three main directions for BNP's growth in China in the next three years, said Baudouin Prot, CEO of the group bank.

"Our target is to double the revenues in emerging markets, including China, Brazil and India, to reach 15 percent of the group company's revenues in three years," Prot said.

Social responsibility

BNP Paribas has long been active in corporate social responsibility in China, the company said.

BNP Paribas Foundation in association with the Chinese People's Institute of Foreign Affairs held an international conference in April on "cultural resources for sustainable development".

Academic institutions including the Shanghai Institute for International Studies, the China Europe International Business School, Ricci Institute for Chinese Studies and Fudan University also participated in the forum.

Through promoting exchanges between cultures and currents of thought, BNP Paribas said it fulfills its social responsibility, contributing to China's efforts in building a harmonious society through renewal and continuity of natural, social and cultural resources.

After the 8.0-magnigutde earthquake hit southwestern Sichuan province in May, BNP Paribas has raised 5.3 million yuan to help the disaster areas.

Half of the donation was contributed by the company's staff on the Chinese mainland, Hong Kong and Taiwan, contributions matched by the bank.

"We hope, in a very modest way, to help with the relief effort," Cristofari said.

Diversified portfolio

With over 160,000 employees worldwide BNP Paribas provides corporate banking asset management and retail banking in 85 countries.

The group said its diversified organizational mix and integrated business model with strong market positions and robust risk management, has brought resilient financial performance.

Despite of the deteriorating financial environment, BNP Paribas registered about 31 billion euros ($48.43 billion) in revenues last year, an increase of 11.1 percent over 2006, according to the company's website.

Credit rating agency Standard & Poor's gave BNP Paribas a AA+ rating early July, indicating a stable outlook of the bank.

Standard & Poor's views the bank's operating profitability as "robust and sustainable".

"BNP Paribas' diversified earning streams, sound performance in all business lines and solid track record in controlling costs will help avoid any significant deterioration in earnings in the next two to three years," the rating agency said.