India is a priority market, says BNP chief

MUMBAI: Even as some of the foreign banks like Deutsche Bank and Barclays are showing renewed interest in retail banking here, France’s largest bank BNP Paribas is keen on the branch banking model. Among emerging markets BNP is looking at retail banking only in Russia since there is tough competition in the remaining BRIC countries — Brazil, India and China.

However, this does not mean that India is not on the radar for BNP Paribas. India is one of the priority markets for the French bank where it has been progressively increasing its investments. In an exclusive interview with ET, Baudouin Prot, CEO, BNP Paribas said,

“We have different strategies for different markets in the BRIC countries. In most of the BRIC markets, we have an active NBFC model.” In fact, Brazil is the fifth largest market for consumer finance for the French group. Earlier this decade, BNP Paribas had started off retail banking in India and then wound up the project. It also exited the institutional brokerage business.

Since then, the French bank has changed plans yet again. “The emphasis on the Indian market has been increasing over the past three years, the evidence of which is seen in the growth of our corporate and investment banking activities along with our private banking, besides our JVs with SBI, Sundaram, and now Geojit. It has also to do with the increasing recognition and the rate of growth seen in India.

It appears strong and sustainable now and India is one of the priority markets. BNP Paribas would complete 150 years by 2010. We are committed to continuously and progressively increase our presence in the country. We also have a executive committee member Alain Papiasse who is co-ordinating the strategy for the Indian operations to step up our presence and strategy in India from the past one year,” he pointed out.

The bank has, over the past 14-15 months, taken a 49.9% stake in Sundaram BNP Paribas Asset Management. It is also in the process of picking a 34.35% stake in Geojit BNP Paribas. It will also have to come out with an open offer of 20%. It had earlier picked up a 26% stake in SBI Life Insurance.

On the question of increasing stakes in the JVs to become majority owners Alain Papiasse, member of executive committee and head of asset management services, BNP Paribas said, “In case of SBI Life, SBI brings in a huge distribution base. In the AMC venture, we are comfortable with the current stake.”

According to current regulations foreign investors can hold only a 26% stake in an insurance venture. As and when regulations permit and if the partner agrees, the French Bank may look at increasing its stake in the insurance venture.

In 2006, the bank helped Indian companies raise up to $750-800 million through ECBs, FCCBs and local debt. This was against $250 million in 2005. “Our total equity investment in India has exceeded $250 million. These investments will grow significantly, in line with our development plans.”
BNP Paribas is also looking at other activities in India, though through partnership models. “We are looking at partnerships in new activities in India, like specialised finance services, mortgage finance, consumer financing and car fleet management,” said Mr Prot.

The bank has been internationalising itself in the past couple of years. Its revenues from France have fallen from 55% in 2005 to 48% in 2006. “We are an European-based financial services group. So our share of revenues for the firm from Europe will continue to remain at 70-75%. We are growing at a very fast pace in Europe as well as the rest of the world. In the last five years, our revenues have doubled,” said Mr Prot.