Perspectives

Bank Interview: Bruno Lavole, BNP Paribas

Published: Jun 2006

BNP Paribas is a European leader in banking and financial services, with leading positions in Asia and a growing presence in the United States. It is the number one bank in terms of net income and market capitalisation in the euro zone. The group has one of the largest international banking networks throughout 87 countries and has over 110,000 employees worldwide.

Bruno Lavole

Head of International Cash Management

Bruno Lavole is the Head of International Cash Management at BNP Paribas, the largest bank of the Eurozone by net income. He is responsible for corporate activities in Europe, Asia and the US, outside of the retail banking network. Bruno Lavole gained extensive international experience as the person responsible for major North American Corporate Coverage, as head of European loan syndication, and in Capital Markets activity.

What is BNP Paribas’ Cash Management strategy in Europe?

As a major European bank with a strong portfolio of products and close working relationships with major corporations, our strategy is to be one of the top cash management banks in Europe by providing global solutions for our clients. We develop global solutions for liquidity management and cash management according to the objectives and the needs of our corporate clients.

We offer a range of global services directly to clients in a large number of countries. We provide this principally in Europe, Asia and America, through our international network. In this respect, in the Retail Banking Area, our on-going purchase of Banca Nazionale del Lavaro will give us a strong footprint in a second major European Market.

In locations where we have no direct presence, we complement our existing network with our local partners’ alliances. We are therefore able to provide liquidity and cash pooling solutions, using selected partners to provide our clients with same day value sweeping of funds (ACCIS).

2005 Gross Operating Income – Breakdown by Core Business
Figure 1: 2005 Gross Operating Income – Breakdown by Core Business
How has BNP Paribas built its cash management business?

Cash management is striking to me on two levels. Firstly, it is something that banks have always done. By definition, these services – payments, collections, facilitating liquidity management for clients – are at the core of the banking business. On the other hand, although it is one of the bank’s oldest activities, it is an activity that is very technologically demanding and rapidly evolving.

As a bank that has traditionally been strong in this market – historically in France, but also progressively in other European countries – BNP Paribas has always offered cash management solutions and services. We have come from a point where cash management was a traditional service provided by banks to clients, to a point where this activity is positioned as very strategic to the bank.

Since January 2000, with the creation of our Cash Management Activity Line (LACM), we have a pro-active strategy with all of our product development being managed in Paris. A year ago, we decided to regroup our international cash management activities in the various countries where we are present under a single international business line. The main purpose of this restructuring was to move towards being a more pro-active solution provider.

Do you see SEPA as a threat?

No, we don’t think that SEPA is a threat. SEPA obviously presents two challenges for banks. One of these is that payment operational models for corporations will change. There will be technological changes required, so banks will have to adapt to those, this will obviously entail some additional costs, which will be one of the challenges for us.

A second challenge is that by having one domestic area for payments instead of multiple domestic areas, there is a risk of going to a commodities model for some transactions, which could lead to lower prices.

However, if SEPA is a challenge, then like any change, it can be looked upon as an opportunity. Furthermore, like any other major change, we will all have to adapt and manage it. BNP Paribas is very involved in working diligently on these changes and we are also keeping our corporate clients closely involved. SEPA will facilitate treasury management for corporations, many of which are our clients. It will facilitate the way they operate and will provide global platforms in terms of operations, which will also be beneficial to large banks like ours, who have a multi-country presence in Europe.

SEPA is a great opportunity for major banks like BNP Paribas – and for our clients as well. Of course there will be an adaptation phase, but overall we see it as an opportunity to concentrate on value added liquidity services. These services will be offered at many steps along the service chain. SEPA will facilitate the standardisation of processes. In this new environment, by expanding our services in the SEPA zone, we shall be able to provide more efficient solutions to our clients. Another area of growing importance today is the quality of information which clients are expecting from banks. This is driven by regulatory and business requirements.

So I see more automation and better qualitative information as two of the major areas where we will see the development of value added services.

How does your cash management offering differ from that of your competitors?

All major players have many points in common particularly in terms of products and capabilities. However our business philosophy is driven by our client’s needs and staying very close to those needs. This leads to two major areas of customer focus:

  1. The first area is that everything we do starts from our clients’ needs. As they evolve, we want to adapt accordingly. So whenever we are working towards product and solution development, we endeavour to anticipate our clients’ requirements. We combine the need to have a global platform and products, with the ability to be very flexible. We adapt to our clients’ demands during the first commercial negotiation and continue to do so during the implementation of the project.
  2. The second area is to find the best balance for the client between a centralised solution approach and the client’s need to also have a local service in our various operations abroad.

So I would say that we do not necessarily focus on a specific area or product, but develop continuously in all areas to meet our client’s needs for global solutions. We do of course standardise the service platforms, but at the same time we also stay both global and local.

How do you see your cash management offering developing in the future?

It’s a continuously evolving business. We have global offerings primarily in Europe, North America and in Asia. We have a strong presence in all these regions. Today, our first priority is in Europe – where BNP Paribas is expanding its domestic footprint through the Banca Nazionale del Lavaro acquisition. In the near future, we will be one of the very few banks with two very strong domestic bases. That is a major move.

We will also continue to invest, as we have done in the past, in products and services such as SWIFTNet. We have a multi-year investment plan to ensure that we continue to offer our clients the latest technology, best products and quality service that they expect. As we evolve, we will continue to be at the forefront, offering our clients what they need in a world where clients’ needs are also rapidly evolving.

How have you seen your clients’ needs develop in recent years?

We are seeing one particular trend that is apparent. Solutions that were, in the past, only considered by major corporates, are now considered, reviewed and implemented by mid-caps and large mid-caps. We have to adapt accordingly. Mid-caps and large midcaps are now expecting the same quality of service that is being provided to major multinationals and we aim to provide this. This evolution is important for cash management banks. Banks like BNP Paribas, which have a strong strategy for this client segment, the capacity to follow up and deliver, and a global European and international presence, are very well positioned.

As far as we are concerned, we see more and more of these large mid-caps coming to us for services, and we see global European solutions sold and implemented with smaller clients which we would not have seen a few years ago. Our clients are expecting more standardisation, more automation and highest quality of service. It’s simply not enough to offer today’s clients strong platforms that are very efficient at processing, collections and payments. It is also essential to have very good service on the ground.

One of our points of differentiation which I mentioned is our client service philosophy, which we have in all the BNP Paribas areas. It’s not only about efficiency; it’s also about service. This means being close to the client and interfacing with the client to provide immediate after sale service and immediate contact. What we do is done in a personalised way – our cash customer service, which is a dedicated after sale service, clearly demonstrates our philosophy. This is not a call centre – it’s a platform where clients are followed specifically by dedicated bank representatives.

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