On 29 September 2022, a few days before the intragroup merger of BNP Paribas Securities Services SCA with BNP Paribas SA took place, Patrick Colle, Head of Securities Services and Chairman of Financial Institutions Coverage, gave an interview to l’Agefi, a leading French media group specialised in finance. In this interview, Patrick Colle explains Securities Services’ role within the BNP Paribas Group’s 2025 strategic plan. Read the full article below.
Patrick Colle, Head of the Securities Services business of BNP Paribas: “Large clients are asking for a highly integrated offering”
L’Agefi Hebdo, 29/09/2022, interview by Alexandre Garabedian and Frédérique Garrouste
Patrick Colle, Head of the Securities Services business line of BNP Paribas, presents Securities Services’ priorities within the Group’s 2022-2025 strategic plan, to be launched on 1 October.
How does the Securities Services business line fit into BNP Paribas’ strategic plan for 2025 ?
Securities Services, a business line within the Corporate and Institutional Banking (CIB) division, is a cornerstone of the BNP Paribas Group. We will be changing our subsidiary structure on 1 October to join our parent company, BNP Paribas SA. This will allow us to offer our clients the full benefit of our integrated bank model, by providing them with an optimised experience, with more simple and fluid solutions. For example, the execution offer will be followed up with our post-trade offers, especially as the bank completed the acquisition of Deutsche Bank’s prime brokerage and electronic equities execution businesses and that of 100% of Exane last year. Today, large clients are asking for a highly integrated and coordinated offering, if possible covered by a single contract. In fact, this legal development confirms the role of the Securities Services business, which has become over the last decade a strategic pillar for the ‘wholesale’ bank — alongside the Global Banking and Global Markets businesses.
What are the driving forces of this growth?
We have given ourselves the means to support clients wherever they invest and distribute funds. Our presence is no longer essentially European but global, with the international expansion of our depositary (17 fund domiciles), custody (27 countries served in local custody), and fund administration (18 countries) activities. In total, our proprietary network covers 90% of the portfolio values of our clients around the world. This setup is unique in the United States, where Securities Services is the only non-American local custodian and fund administrator.
How does the group stand out from its competitors?
We are the only European player among the world’s top five by assets under custody. On the revenue side, we are close to number 4, Citigroup. Compared to the other major players, most of whom carry out the majority of their business with the buy-side — asset managers and institutional investors, Securities Services benefits from a diversified clientele: half of our revenues come from institutional investors and asset managers, 15% from alternative managers — a growing market, and 35% from financial intermediaries (sell-side). The latter allow us to benefit from increased trading volumes.
Similarly, our offering covers a variety of assets, in terms of securities and derivatives. It also includes a hedge fund administration component, augmented by the acquisition made by our Global Markets business of Deutsche Bank’s prime brokerage and the recent agreements with Credit Suisse on this activity last year. Finally, in recent years, we have become the lead banking player for the administration of private capital funds in Europe with EUR 700 billion in assets under service.
What are the growth objectives by 2025?
We aim for a steady, reasonable, and above all disciplined growth, without giving numerical targets. Rising rates are a positive factor for our business. Above all, we want to increase our market share in the countries where we are already established, in all three regions. There is significant room for improvement, starting with France and other major European countries such as Germany, Italy and the United Kingdom. In Asia-Pacific, we will strengthen our activities in Hong Kong and from there, the rest of China. Singapore, Australia, New Zealand and India are also among our growth targets. In America, the United States and Brazil are our two flagship countries.
Where are your major technological priorities?
We want to continue to innovate with our technological know-how. We launched a triparty collateral management offering to optimise the mobilisation and use of collateral, such as that held by our local clients in various countries, thanks to systems that are more agile than those of the major players who have long been present in that area. Similarly, for private capital, we rely on the eFront, owned by BlackRock, in parallel with Aladdin, which is the subject of a partnership concluded with BlackRock in spring 2020, We want to automate middle and back-office complex front-to-back processes. Our technological ambition often and increasingly draws on partnerships with fintechs. We have accelerated acquisitions of equity stakes for about three years. For open-end funds, the 2020 strategic partnership agreement with Allfunds represents an important step.
What are your ambitions with regard to blockchain technology?
The prognoses made a few years ago for the replacement of all securities intermediaries by blockchain have not materialised! The market is entering a new, more realistic phase, which will see the coexistence of traditional and digital assets. Today, we are witnessing a proliferation of platforms to simplify complex operations through blockchain. We took part, along with other large banks active in collateral management, in the HQLAx platform, whose offering is now available. In addition, we are preparing for the custody of digital or tokenised assets. In July, we announced partnerships with Fireblocks and Metaco to develop a custody offer dedicated to regulated digital assets.
What is the sustainability component of the new strategy?
We provide industry players with ESG measurement solutions (environment, social, governance, editor’s note), for example via our start-up Manaos, a platform — open to all — that aggregates and standardises portfolio inventory data to “consume” them through multiple ESG applications, knowing that ESG data providers all have different approaches. Its use is growing steadily, with 75 asset managers to date and 1,000 billion in assets in the portfolios loaded on the tool.
The Securities Services business of BNP Paribas is ranked #5 globally with:
- EUR 12,000 billion in assets under custody
- EUR 2,300 billion in assets under administration
- 150 million transactions settled per year
- EUR 664 million in revenues for the second quarter of 2022: +16% from Q2 2021
- 11,000 employees