BNP Paribas seeks network cuts
BNP Paribas, France’s biggest bank, is looking to cut costs in its branch network to bolster its defences against a weakening European economy, after hitting a goal to strengthen its capital reserves ahead of schedule.
Banks across Europe are slashing costs and selling assets to cope with tougher regulations aimed at preventing a repeat of the 2008 financial crisis, as well as the impact of countries’ austerity drives to reduce their deficits.
Retail banking, once viewed as a stable counterweight to riskier investment banking, is now also coming under fire as it struggles to make money in a era of low interest rates.
“The European economy is slowing down but we have a very good, strict risk control, and we are also working quite efficiently on the cost base,” BNP chief executive Jean-Laurent Bonnafe said yesterday, citing domestic retail banking as an area with scope for cost cutting.
Bonnafe, who has yet to detail his vision for the group almost a year after taking the reins, was speaking after BNP posted a doubling of third-quarter profit, helped an industry-wide rebound in debt product sales, and said it had met a key capital target ahead of schedule.
Its shares were up 4.9 per cent at €41.04 yesterday morning.
BNP’s quarterly net profit surged to €1.32 billion from €541 million the same time last year. Revenue fell 3.4 per cent to €9.7 billion.
Like rivals, BNP benefited from central bankers’ moves to spur growth and promises to keep the euro zone from breaking apart, which buoyed trading in the quarter.
However, revenue at its French retail bank – traditionally a “cash cow” – fell 2 per cent, testament to bankers’ views that domestic branch networks are ripe for cutbacks.
BNP has 2,250 branches in France, and retail banking there accounts for about 17 per cent of its total revenue.