BNP Paribas Securities Services continues to expand its offering outside of France and even Europe, with half of new clients coming from outside the continent last year. Yet the bank remains somewhat cautious as it looks to expand into new markets, with its strategy over the last few years being to operate as a sub-custodian in approximately 30 countries, in order to have a presence where 95% of the world’s assets lie.
“You could summarize our strategy as follow the UCITS,” said Patrick Colle, CEO of BNP Paribas Securities Services at a recent press briefing in New York.
For instance, UCITS growth has been strong in Latin America, and BNP Paribas set up as a local custodian in Columbia (its 26th market as a sub-custodian) and opened an office in Chile approximately a year and a half ago. Colle affirmed that the bank’s presence has been a success, particularly in Columbia where a lack of much choice in providers and new regulation requiring funds to appoint a local custodian has meant strong growth in the market for BNP Paribas.
The next step in the region, said Colle, is possibly expanding local custody services to cover all the Mercado Integrado Latinoamericano (MILA) markets, but not necessarily by opening as a local custodian in the others (Mexico, Chile and Peru).
While the bank has expanded significantly of late, Colle said that “sometimes the best decisions are to not do something,” meaning that going into a country just for the sake of expanding the number of markets isn’t a good strategy. Thus, the bank has been somewhat cautious before entering a new country.
For example, Colle said that BNP Paribas does not have plans to expand into Eastern Europe, in part because some markets carry geopolitical risk. And in other cases, BNP Paribas isn’t jumping into markets such as Canada that appear to be more stable.
Claudine Gallagher, regional head of North America, BNP Paribas Securities Services, said that while the bank looks at Canada regularly, the country is already well banked, and if BNP Paribas were to enter a market, it would be important to differentiate their service from competitors.
However, Gallagher and Colle noted that Canada remains tempting even though there hasn’t been a huge impetus to set up local custody, and the banks plans to continue looking at it over the next two years.
BNP Paribas Still Eyes Sub-Custody Expansion, But With Patience
BNP Paribas Securities Services continues to expand its offering outside of France and even Europe, with half of new clients coming from outside the continent last year. Yet the bank remains somewhat cautious as it looks to expand into new markets, with its strategy over the last few years being to operate as a sub-custodian in approximately 30 countries, in order to have a presence where 95% of the world’s assets lie.
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