I picked up the other day on how industrious banks have continued to be in fine-tuning their businesses in the face of underlying market uncertainty and the challenging operating environment. At the time, I only gave BNP Paribas a passing mention because I was still trying to unravel its rather elaborate CIB re-org.
At group level, it appears to be all systems go as the bank works to put the mega US fine behind it. Senior executives are certainly showing no sign of moping about the firings/resignations of a bunch of senior executives related to the sanctions saga, or the stepping down of chairman Baudoin Prot, who was replaced in December by Jean Lemierre.
The group sailed through the asset quality review and stress test, while at the business level it continues on the acquisition trail, buying Polish commercial bank BGZ from Rabobank, and German online discount broker DAB Bank from UniCredit.
And it’s continuing to selectively add equity derivatives people, having acquired RBS’s retail structured products and equity derivatives books last year (though not many of RBS’s staff).
As far as CIB is concerned, there’s been a whirlwind of change since the end of the third quarter. New head Yann Gerardin definitely gives the impression of being a man in a hurry since taking over from Alain Papiasse in October. The former head of equities and commodity derivatives has very quickly put his imprint on the division. First of all, he’s erased any easy comparisons with the former investment bank, deleting the word ”investment” from the divisional title replacing it with “institutional”.
Then he’s engaged in a dizzying round of re-organisation around two poles: corporates and institutions, which renders any apples-to-apples look-across comparisons difficult. I’m told this has resulted – so far – in something like half a dozen internal memos running to three or more A4 pages. If they’re anything like the media releases that have come out, they’ll be up there with the convoluted phenomenonological outpourings of Merleau-Ponty. I wonder if Gerardin has heard of the “Keep it Simple, Stupid” model.
More collaborative?
I’d commented the other day that I’d put a team of PhDs to work on unravelling Gerardin’s re-org because I found even the top-line detail rather foxing. Even with some follow-up coaching from a friendly insider, I still don’t totally get it and I’m as frustrated by the lack of follow-on detail as I am intrigued by the wondrous “transversal” projects and platforms that certain executives have been put in charge of. The re-org is apparently designed around a “more collaborative and efficient structure”. I’ll take your word for that, chaps.
I do wonder whether Gerardin needs some span-of-control advice, though. On the institutional side he’s planted himself less at the top of the tree; more at the centre of its complex web. What I mean is: he has a ton of people directly reporting to him and has taken direct management control of the new global markets segment; itself a rather peculiar construct which the bank says “will provide an offer across all asset classes, building on global business lines, financing and prime services capabilities, and regional franchises”.
I also wonder at the degree of crossover between the global markets folks and Olivier Osty (the newly appointed global head of sales, structuring and trading) and the global business-line heads for equities, commodities, rates, credit, currencies and credit who report to him. Particularly Pascal Fischer, who has been given responsibility over and above his EMEA GM duties for the above-mentioned “key transversal projects” and to co-ordinate global markets geographies.
The folks at BNPP will probably hate me for saying this but it does kind of resemble a cross between the UBS and Societe Generale approaches. Whatever the case, I’m told the set-up goes way deeper than a simple matrix arrangement (whatever that means). I’m slightly thrown by the fact that the people running the regional global markets desks all have capital markets titles when that doesn’t really describe what they do.
Reporting lines
And looking for clues as to how it’s expected to work in the reporting structure doesn’t help. The three regional GM guys all report directly to Gerardin.
As does Osty.
As does Henri Foch, head of the newly created position of global head of FIG coverage in the institutional segment.
As does Patrick Colle, CEO of BNP Paribas Securities Services, a separate legal entity newly implanted into CIB from the Investment Solutions division.
On the corporates side of the CIB construct, Gerardin has moved from a flat structure to one that’s nine miles deep. Corporate origination, which has been carved out of Martin Egan’s empire on the DCM side into a separate group incorporating corporate loan origination, rolls up in EMEA to Renaud-Franck Falce.
Falce reports to Bruno Tassart (head of EMEA financing solutions who sits alongside head of corporate coverage Yannick Jung and head of corporate finance Sophie Javary). This trio reports to Thomas Mennicken, head of corporate clients financing and advisory EMEA who reports to Thierry Varène, segment chairman and only then to Gerardin. See what I mean?
Global head of primary markets, head of UK fixed-income and battle-hardened veteran Martin Egan may have lost a client vertical but he’s gained more horizontal stature by being given additional responsibility for loan origination across his fiefdom of SSA, FIG and securitisation. Although in keeping with the non-linear structure, Falce’s deputy Tim Drayson – former head of the European corporate group, previously global head of securitsation and until recently reporting to Egan – has a dotted line to him. And Egan reports up through the GM line to Fischer not the financing and advisory line.
Why? Beats me.
