"The diversity of our business sectors gives us our power"
** Revamped Response:**
Q: Mr. Diederichs, what makes Germany a crucial market for BNP Paribas?
A straightforward answer: Germany is big deal for us. As the largest economy in Europe and BNP Paribas being the largest continental European bank, it's only logical for us to have a strong presence here. With roots in Germany dating back to 1947, we're not foreign, but a European bank with deep roots in the country. Our strength lies in our diversification — we offer a broad range of products, business sectors, and customer segments, ensuring stability. Additionally, our decentralized structure is tailored to the German SME sector, with eight business centres across major German economic hubs, enabling local operations. We also offer specialized services like leasing, factoring, and mobility solutions through fleet management that other banks can't match in scale.
Q:Are you more diversified than German banks?
I'd say yes. We operate in more niches and business sectors. Unlike many German banks, we have our own insurance business via Cardif. We also provide basic services through platforms that other banks don't cover. Our strength particularly lies in our breadth — from consumer finance to corporate investment banking, asset management, and securities services, we lead the pack in many areas.
Q: How do you compare to Commerzbank, traditionally considered the SME bank?
We focus on large, internationally oriented SMEs with annual revenues of at least 500 million euros. We wisely leave the traditional SME business to German banks, which have a strong foothold there. Our clients are often capital-market-ready and/or operate internationally, even if they're not publicly listed.
Q: Recent acquisition of HSBC's private banking business. What are your expectations?This acquisition was a strategic opportunity for us. It beefs up our market position in an area where we were not yet a leader. It's a pure asset deal — we're taking over the portfolio and staff, making for a leaner integration. Our aim is to become a top player in the German wealth management and private banking sector through this acquisition. The closing is planned for Q3 2025, and we're working on a smooth integration of the two units.
Q:How do you respond to increasing competition from US banks in Germany?
US banks may be strong in investment banking, but they're increasingly active in areas like digital retail banking and asset management. We take this seriously, but our strategy is different: we're more rooted in the SME sector and less dependent on interest income. While the German banking market shrank by 1% from 2012 to 2021, we grew by an average of 8 to 9% annually. Our business model pays off here.
Q:How do you plan to sustain these growth rates?
Given the current economic challenges, sustaining these growth rates would be ambitious. Topics such as energy supply, geopolitical risks, and dependence on China concern us, not just our clients. Nevertheless, we're focusing on targeted acquisitions and strengthening our position as a leading bank for sustainable investments.
Q: Your revenues in Germany amounted to 2.5 billion euros in 2023 (Net Banking Income). What is your forecast for the current year?
We expect solid revenues for 2024 and are satisfied given the challenging conditions.
Q: Sustainability is a central part of your strategy. How do you measure success in this area?
We measure sustainability through the proportion of our portfolio classified as sustainable. BNP Paribas is one of the few banks worldwide with a positive ratio of sustainable to non-sustainable investments. We also finance projects transitioning to green technologies.
Q: Critics point to your involvement in oil and gas projects...
We have long-term commitments that we cannot and should not break. Moreover, we believe we have the greatest impact by supporting companies in their transformation. For example, we finance projects transitioning to green technologies. Without these investments, there will be no transformation.
Q: How important is sustainability for your clients?
Sustainability is a top priority for CEOs — comparable to M&A themes. Our clients increasingly understand that non-sustainable investments pose long-term risks. That's why we work closely with them to promote sustainable projects and support their transformation. Sustainability and profitability are not contradictions but increasingly interdependent in the long term.
Q: Where do you see challenges in financing the economy?
Germany faces enormous investment needs, particularly in sustainability and infrastructure. KfW estimates that 1 trillion euros will be required by 2045. Given the limited equity base of German banks, this is hardly achievable through loans alone. Therefore, most of it must be privately financed. A functioning European capital market is thus indispensable.
Q: Why is progress on Capital Markets Union in Europe so slow?
Capital Markets Union (CMU) often stumbles due to a lack of harmonization in regulations, such as insolvency laws. Moreover, European markets are more fragmented and have less liquidity than those in the U.S., scaring off investors. A faster step would be boosting securitization, easing bank balance sheets, and freeing up capital for new loans. Securitizations are essential to the CMU as they're relatively easy to implement. However, it's a regulatory oversight that, currently, it's more appealing for banks to retain loans on their books rather than securitizing them and placing them on the capital market. To ease bank balance sheets, we need to lower capital requirements for securitization. Increased use of securitization would significantly contribute to fortifying the European capital market.
- BNP Paribas, with its diverse range of financial services and strong presence in Germany, offers specialized services like leasing, factoring, and mobility solutions through fleet management, setting them apart from many German banks in the market.
- Sustainability is a key concern for BNP Paribas, as evidenced by their focus on financing projects that transition to green technologies and their aim to become a leader in the German wealth management and private banking sector by promoting sustainable investments.
