BNP does away with silos
Since it was established back in May 2000 as an independent, separately capitalised subsidiary, following the merger of Paribas and Banque Nationale de Paris, BNP Paribas Securities Services (BP2S) has established itself as the leading indigenous provider of custody and clearing services within Europe. In addition to a peerless bricks and mortar network across the region - acquired from JPMorgan in 1995 - BP2S also has all the key bases covered from a product perspective.
Its multi-direct custody and clearing (MDCC) offering provides direct clearance and sub-custody services across 13 European markets (11 through its new branches) and processes some 25m transactions annually, and is closely aligned with its global liquidity management (GLM) cash and equity financing business. Then there is its global issuer services (GIS) arm and its custody and fund administration offering in the shape of institutional investor services (IIS).
The acquisition of dedicated outsourcing and fund administration provider Cogent in 2002 plugged a number of holes, not least CBP2S’ short-comings when it came to servicing the critical UK market. The Cogent deal also bolstered its existing operations in the key offshore centres of Dublin and Luxembourg, as well as endowing it with a Sydney-based back office outsourcing unit that allows it to service fund management clients in the Asia-Pacific region via a single platform. Factor in a multi-product, multi-domicile back office outsourcing capability, and it is clear why BP2S was so determined to clinch the Cogent deal.
That the Cogent acquisition would skew BP2S’ business model in a new direction was to be expected, and so it should not come as any surprise that the head of BP2S, Jacques-Philippe Marson, and his management team, should instigate a major internal reorganisation. The groundwork was laid in June of last year, when the operating side of MDCC, IIS and GLM were brought together within a single business unit - known as banking operations - under the responsibility of Alain Prochet. At the same time, a non-banking operations unit was set up encompassing fund administration, fund accounting, transfer agency and all the other value-added services related to the non-banking part of the business.
The idea was that these two units would operate in what BP2S described as a ‘transversal’ fashion – in other words they would be autonomous, but nonetheless very closely linked. It is this concept that underpins the second phase of the reorganisation, which was completed on 21 June .
The four existing business lines - MDCC, IIS, GLM and GIS - were essentially vertical silos, fully autonomous units that each owned the complete range of tools and resources required to develop and conduct their business. Client relationships were similarly ‘vertical’, with the buy-side (institutional investors) and sell-side (investment banks and broker-dealers) rigidly compartmentalised. Specific clients were matched to specific products.
Flexibility, however, is paramount these days: Marson recognised that the wall between these two business lines was getting in the way of valuable cross-selling opportunities as clients emerged from the recent market tribulations looking to move into new product lines and avenues of distribution. Accordingly, two new management teams - coverage and product and marketing - have been put in place.
The former - headed up by long-serving BP2S executive Charley Cock, who will be assisted by former managing director Tony Solway - will cover four clearly delineated client segments: financial intermediaries, institutional investors, corporates (basically treasurers, both within corporates and financial institutions) and securities groups. It will be tasked with generating new sales and revenues and further strengthening client relationships – this will include oversight of all sales and relationship managers and a sales support team.
Cock and Solway will be working closely with their counterparts on the product and marketing team - headed by Michel Laurent, formerly global head of IIS, and his deputy Jean-Marc Pasquet - who have responsibility for budgets, pricing, product development, market positioning and the management of a marketing and business development team. Four new product lines have been created: clearing, settlement and custody, global fund services, global liquidity services and global corporate trust.
“This new structure will allow us to better face our future challenges – acquiring critical mass, deepening the relationships we have with our largest clients, gaining new clients and increasing our resistance in a acutely competitive environment,” says Marson. “The reorganisation enhances the scope of our product lines while improving the integration between them, so we are now able to look at individual client segments and tailor a bespoke package comprising any of the different elements they might require.”