2012 Top International Operations Executives
2012 TOP INTERNATIONAL OPERATIONS EXECUTIVES:
The More Things Change, The More They Stand Out | DIANA CHAN: Shaking Things Up, In European Clearing | CHRIS REMONDI: Increasing Information, Reducing Risk | NEERAJ SAHAI: Marrying Large-Scale Technology With Boutique Service | KEVIN MILNE: Making an Exchange Succeed By Working With Rivals | THOMAS ZEEB: Gold Standard in Securities Processing | CHRISTOPHER JAYNES: Cutting Out the Custodian Bank | PATRICK COLLE: Going Global, But Not Everywhere | TONY FREEMAN: Targeting Two-Day Settlement
PATRICK COLLE: Going Global, But Not Everywhere
December 20, 2011
For Patrick Colle, international is not enough.
For BNP Paribas Securities Services to be successful, he believes it has to be global.
But not necessarily at the top of the heap in every continent.
Let’s start, however, with the ambition. Because Colle, only in his second year as chief executive of the wholly-owned subsidiary of what by some measures is the world’s largest bank, has plenty of that.
Way back in 2008, before the credit crisis erupted, BNP Paribas Securities Services had $5.0 trillion of assets under custody, $1.0 billion under administration and administered close to 6,000 funds. It had a local presence in 25 countries and coverage of 92 markets, all told.
Now, at the end of 2011, the operation has $7.0 trillion of assets under custody, $1.2 billion under administration and administers 6,619 funds. The firm has local presence in 32 countries and operates in more than 100 markets. Globally, the firm now ranks as one of the top give providers of securities services.
But Colle thinks the business is just getting started.
:You’ve got to have a global footprint,’’ he said at the SWIFT International Business Operations Seminar in Toronto. “Doesn’t mean you need to be everywhere, but you need to be present at least in all the key regions.”
For BNP Paribas, that means more of Asia, more of Latin America, Brazil in particular. But … not necessarily North America. Not at least in the conventional sense.
Colle sees no need to go head to head with State Street, BNY Mellon and Citigroup to win new clients. But giving white glove service on all fronts to customers it wins and continues to serve in Europe, Asia, South America and elsewhere? That’s worth fighting for.
“Our strategy is to provide global solutions to our clients,’’ he said. “It is clear that we need to be able to provide our European clients, and more and more Asian clients that are becoming global, solutions that comprise not only Asia, where we are covered, Europe, where we are covered, but also the U.S., because they have U.S. funds, right?”
An asset manager in the United Kingdom, for instance, will place assets in “a bunch of U.S. funds.” They likely also have a bunch of Asia funds. For BNP Paribas, the point is to support them wherever they are. But to do so from a position of strength.
Which started with its roots in France. But in the past five years, the firm has gone from a “very national business” to a European business to a multicontinental business. And now, Colle has sights set on going from international and intercontinental, to global.
Asia has been the focus this year. BNP opened an office in Hong Kong two years ago and is now the largest third-party clearer on the Hong Kong Stock Exchange.. Last year, it opened a representative office in Beijing and this year a full office in Mumbai. It has a small presence in Tokyo, but a long-standing presence in Australla and New Zealand.
As a result, Asia Pacific now accounts for about 15 percent of its staff today, which has gone from 5,400 in 2008 to 7,200 in 2011.
Not just staff, but management, he says, is going global. Sure, Colle is French. But it helps now to have different cultural and language skills, if you want to help BNP Paribas succeed, globally.
Really, take both.
One of its strongest country managers was its executive running Spain. So he got a region to run. And that region is defined as … Spain, Portugal and Latin America.
The cultural affinity and the language affinity across those nations made it almost a “no brainer.” But there is also product affinity. Custody of securities is handled much the same in Latin America, as in Spain and Portugal.
“Chilean local institutions, asset managers in particular, were quite attracted by our global products,’’ he said. But also, “they felt attracted by the fact that they were talking to people who were all Spanish speakers. The connectivity was strong and immediate. And we found out that they didn’t have to have global custody booked in Chile; That could be booked in Spain. And, as a result, we’ve started winning mandates from Chile.’’
That foundation, in turn, helped when it came time to roll into Brazil. Its office was launched in November and by September, its operating platform was in place.
“Brazil is done,’’ Colle said “Now we are selling Brazil.’’
Along the way, though, Colle has organized the company along four business lines, wherever it operates.
Clearing and custody services
Asset management and fund services
Corporate trust services
Foreign exchange, lending and financing services
And six global client segments, as well. “So if we administer the fund of an insurance company in Germany, we can put the expertise of the client segment, insurance, and the region and the country, Germany, within northern Europe,” on the case. “Nothing falls through the cracks,’’ he said.
When BNP Paribas Securities Services goes after a new market or piece of business, it sends in SWAT teams to get set up. In this case, the example is Hong Kong.
“What we did is we negotiated with the Hong Kong authorities, the Exchange, the Regulator, and said, “Guys, it would be good for your market, to do like in Europe and the U.S., third-party clearing,’’
“By the way, we are the leader in this space in Europe, so we can help you, explain why it makes sense, how to do it, and we can do it,’’ he said. “So that happened. It was approved by the regulators, so we were allowed to implement it. And we then immediately brought in all of the business of our investment bank. Our investment bank is huge in Hong Kong. And we started bringing in third party clients.”
The sum of that is what made BNP Paribas the largest third-party clearer on the Hong Kong Stock Exchange.
Now it is focusing on helping its asset manage clients bring more UCITS funds to Asian customers. It administers their usage out of Europe, in Luxembourg, and through its transfer agency services collects subscriptions, redemption instructions and processes them. Recently, it picked up its first Chinese asset manager client.
In the U.S., its services will be beefed up, Colle said. But for non-U.S. clients. To support European and Asian clients. “We are not seeking to come to the U.S. to compete against U.S. firms for U.S. local business,’’ he said. “Nobody needs us to do that, frankly.”
How will Colle judge success? By the discipline of metrics, he contends. Revenue, profits, assets under custody, assets under administratation.
But, as the company goes global, it will be global measures that matter. Like global assets under custody. How is that different from plain vanilla assets under custody?
“Global custody assets is when one client gives you a portfolio of assets that are comprised of assets from different countries, but in one single portfolio,” he said. “So it’s one multi-currency account, if you want, coming from one client; as opposed to the sum of mono-country, mono-currency custody.”
And in the end, that captures what really matters: the breadth and depth of a relationship.
“We rarely have all of (a customer’s) business,’’ said Colle. “So satisfying our client is our number one objective, right? Because it’s also the best way to grow your relationships and your businesses.”