Banque Nationale de Paris Intercontinentale (BNPI), an offshoot of France’s BNP Paribas, is celebrating its 60th year in Lebanon, an indication that the bank remains confident of the Beirut market. Based on the niche market the bank has already carved for itself and its plans for regional growth, it is clear that the decision to maintain its presence here is also a well-planned, strategic move. “It is important for us, as an international bank, to be in Lebanon, not only because it is the link to Europe, but also because it is the key to developing our regional business in the Middle East,” said Claude Rufin, BNPI Beirut director-general.
BNPI has regional expansion plans that evoke an echo of the bank’s past. After establishing itself in Lebanon in 1944, BNPI moved into Syria in 1945, Egypt in 1948, and Iraq in 1954. Because of regional turmoil, it was subsequently forced to pull out of all but Lebanon. And recent unrest has proved a core problem in enticing French corporate clients to set up shop in Lebanon. “We are trying to bring them here, to convince them that life is good here, and that you can do business here,” he said.
The bank has already reestablished itself in Egypt, and has opened branches in the Gulf – including Dubai, Bahrain, Qatar and Abu Dhabi – and has just received a license to operate in Saudi Arabia, where it plans to establish an outlet “within a few months.” BNPI has also asked for a license in Kuwait, which is expected by the end of the year.
Saudi Arabia’s attractive GDP was, Rufin acknowledged, a major element in the bank’s decision to move into the kingdom, despite a recent spurt of al-Qaeda insurgency. BNPI will be seeking to diversify its activities in Saudi Arabia, from corporate and investment banking, to dealing room and swap operations, and most significantly, private banking. “After all,” Rufin observed, “there are significant private fortunes in the country.” Rufin said BNPI plans to return to Syria and Iraq – at some stage – and to open a branch in Jordan as well. But a recent law in Syria allowing for 49% foreign ownership of a bank does not satisfy BNPI. It will only invest in Syria if it is allowed majority ownership, despite the allure of Syria’s retail banking potential.
As well as regional expansion, BNPI is also planning growth within Lebanon. The bank’s leading international status – BNP Paribas is the world’s fifth largest bank – and 100% French ownership have helped it lure in, and retain, both corporate and private customers – notably among the worldly Lebanese – who see BNPI as a confidence-inspiring international financial bastion tinged with a Lebanese hue. “They can do business with us in Beijing, Sydney, or New York,” noted Rufin. The bank has five branches in Lebanon and employs 215 staff.
Rufin conceded that BNPI had seen business wane in Lebanon over the years. Back in the 1950s and 60s it presided over one of the biggest market shares in the country.
“Our strategy is not to chase market share,” explained Rufin. “We focus on winning over top corporate clients and high net-worth individuals. We serve fewer clients, but they are top-notch, and interested in what an international bank has to offer.” Although not in pursuit of market share, the bank makes sure it maintains a solid balance sheet marked by a high profit ratio. It has a return on average equity of around 50% and a cost-to-income ration of below 50%. The main raison d’étre of BNPI, Rufin said, is the provision of economical loans to the private sector, which is reflected in the bank’s loans-to-deposits ratio of above 50%.
According to Rufin, the pillars of BNPI’s continued high profitability have evolved over time. The bank has always concentrated on corporate investment banking, with a focus on corporate clients turning over more than $10 million a year. In this context, a variety of offers, including business collateral and short- and medium-term facilities, are provided. The bank has also added a strong emphasis on the financing of international trade in the last few years. With a view to Lebanon’s strong import-export tradition, which has been bolstered by perceived business opportunities in Iraq, BNP Paribas established a new “trade center” in Beirut. Offering banking services with a trade focus, it is one of 80 such centers around the globe whose interconnectivity facilitates international trade. In addition to its corporate banking strength, BNPI has turned increased attention towards private banking, offering clients high-return products. Certain accounts offer returns of 3% to 5% on the dollar. Other products, all capital guaranteed, provide higher returns of between 6% and 10%, but over a longer time frame. “These are for clients who are a little more sophisticated,” observed Rufin. BNPI tailored products developed by its parent institution to the needs of the Lebanese market and opened a private banking center in Beirut one-and-a-half years ago in support of its activities. This center is electronically connected to all BNP Paribas private banking establishments in Europe. BNPI is also attempting to develop its retail banking business. To this end, the bank has overhauled all its branches in Lebanon, to homogenize them with modern branches in Paris, Honk Kong or New York. Emphasis is being placed on customer care. The bank is also developing services in conjunction with insurance providers. “With our international backup we should be able to offer the kinds of products that will attract clients, such as loans that were not offered before, especially as the Lebanese real estate market is thriving. We will try to be much closer not just to the companies or very wealthy clients but to more medium-range customers interested in banking with an international bank.” BNPI’s continuing expansion and growth plans in the country may seem surprising considering the recent decisions by foreign banks to reduce their exposure to Lebanon or pull out altogether. But Credit Agricole’s recent move to slash its ownership of Banque Libano-Francaise and ABN Amro’s withdrawal from Lebanon in 2002, did not cast a shadow over BNPI’s resolve to maintain its presence here. “We do not plan to leave Lebanon, because 1) we know the market, 2) we know the clients, 3) we remain profitable – which is crucial, 4) Lebanon is a country that can develop financially and economically, in a regional context, creating synergy with our other branches in the region,” said Rufin, adding that the bank had also created customer loyalty by providing uninterrupted service during the war.
According to Rufin, the country’s historic commitment to banking, dynamic economy and a resurgent real estate market was cause for optimism, as was the increase in international conferences being held here and tourists visiting Lebanon. “One gets the impression that, little by little, Lebanon is reacquiring a regional role. Its efficient service sector is a big help. There is word of a 3% to 4% increase in GDP this year. It’s a start.”