BNP Paribas Securities Services has signed an agreement for the purchase of Banca Popolare di Milanos (BPM) depository banking business for 55 million.
Although Italy has a fragmented banking industry, this latest acquisition by BNP Paribas continues the consolidation of the Italian custody market. In 2006 UniCredit, one of the biggest domestic banks, sold its Italian securities services business to Societ Gnrale Security Services. 2009 saw RBC Dexia purchase Unione di Banche depositary bank and Intesa Sanpaulo sell its securities services business to State Street.
The BNP Paribas deal will include all depository bank services currently performed by BPM for long only and alternative funds on behalf of asset management companies belonging to the BPM Group as well as external clients. Assets under management will total 20.3 billion, with around 19.1 billion relating to long only funds and the remainder to real estate and hedge funds.
The acquisition also builds on the 2007 purchase of the Italian third-party depo bank business for fund of hedge funds from RasBank by BNP Paribas.
Speaking to GlobalCustodian.com, Mauro Dognini, Global Head of Fund Administration Solutions said: We have been present in Italy for 20 years – it is the second domestic market for BNP Paribas. We value the acquisition of BPM as an interesting opportunity for us to increase the size of our business in Italy. Today we are the second largest provider of securities services in Italy, after Intesa San Paolo/State Street, and if you count in terms of number of clients and number of relationships, we are by far the number one provider of securities services.
Although Dognini admits that due to the consolidated market there are fewer opportunities for growth, there are other ways for BNP Paribas to expand its presence in Italy. The market is still an interesting market for pension funds, and for the savings market, he said. We still have opportunity to grow in terms of client acquisitions or organic growth.
BNP Paribas Securities Services was recently appointed by Italys largest pension fund, Cometa Pension Fund as depositary bank in Italy. The role was previously held by Intesa San Paolo/State Street.
According to Dognini, the main client acquired by the BPM deal will be the asset management arm of BPM, Anima SGR. There will be another 12 smaller clients that come with the acquisition, continued Dognini.
The press release accompanying the announcement stated that the transaction is set to close during the first half of 2010. The transaction is subject to two major conditions. Firstly, Anima SGR must fulfil the Bank of Italy rules for the required changes to the regulations of funds managed by the company that arise as a result of the sale. As well some preliminary agreements already signed with certain employees of the business unit must be executed in front of the trade unions (or other competent offices).