BNP Paribas, the biggest French lender, is looking to expand its India client base, step up the ticket size of loans and take a strategic bet on the country. Sanjay Singh, CEO and head of territory, BNP Paribas India, also confirmed the bank has recently received a ₹300-million capital infusion from its Paris-based parent group. The lender has carried out equity capital market deals worth $4.2 billion over the past year, and is noticing optimism among clients for the future pipeline. Edited excerpts from an interview with Bhaskar Dutta.
ET has learnt that BNP Paribas India has received ₹300 million worth of additional capital over the past couple of months. What triggered the decision and what are the India plans for the bank?
As a leading global bank, BNP Paribas sees India as a strategic market and this capital infusion is a testament to our ambitions for India. India is a focus market for BNP Paribas, and we have been deeply embedded here for over 160 years. The market itself is rapidly evolving on the back of strong macro tailwinds, solid fundamentals, positive demographics and progressive policy support. It (the capital infusion) shall empower us to further expand our client base, increase our ticket sizes and better leverage our local product capabilities. Further, the recent reduction in corporate income tax on foreign companies is a welcome gesture and it is expected to catalyse foreign investments here.How is the landscape for dealmaking and investment banking looking in 2024?
There is a noticeable resurgence of momentum in 2024 driven by themes like domestic consolidation and PE exits. In sectors like healthcare specifically, owing to the strong balance sheet of Indian companies, we have seen a surge in both domestic and cross border activity. On the ECM (equity capital markets) front, I expect an active landscape driven by strong fundamentals, positive investor sentiment and appetite for global players to list their India subsidiaries. We have already done 11 ECM deals worth $4.2 billion in the last 12 months and the pipeline continues to be robust. Our clients are closely watching dollar rates and a shift in interest rate environment is likely to see a rebound in dollar bond issuances.
How has BNP Paribas dealt with the regulatory issues between the Indian and European authorities over the treatment of the Clearing Corporation of India Limited and the impact of that on bond trading?
As the European Union’s top bank, we have been part of discussions with all stakeholders. As mature businesses, we all work with a back-up / contingency plan; we do not expect a disruption of activities. We are confident that the regulators shall reach an amicable solution sooner rather than later.
Noticeable Resurgence of Dealmaking
Could you give us a sense of how the global markets business has performed this year and what the outlook is going ahead? Globally markets have been volatile.
We have had a strong H1CY24 (Jan-June 2024) across global banking and global markets including custody and FIC.
On the corporate side, global banking is in the midst of a purple patch with both inbound and outbound activities between India and Europe/ Americas growing consistently. The strength of our group balance sheet, extensive global footprint and robust business offering has helped us cater to marquee and bespoke opportunities. The outlook and momentum for our business is bullish not just for 2024 but over the next few years. Given the geopolitical situation and some key elections, we expect volatility in the markets and hope to surf through with agility by staying nimble and proactive.
BNP Paribas recently launched operations in the GIFT City. Could you give us an idea of specific products the bank would be looking at to facilitate access for offshore clients?
Gift City provides the avenue to offer international financial banking experience on Indian shores. The branch offers external commercial borrowings, trade loans etc. catering to foreign currency funding requirements of our clients.
We are in the midst of booking a couple of ECB deals. Being amongst the top derivatives houses globally, GIFT presence will enable us to leverage this expertise to serve our clients better with alternate hedging solutions.
BNP Paribas’ Indian branches reported a 25% increase in net profit for the year ended March 31, 2024. Which segments drove this and what do you expect for the current year?
We believe in forging a long-term relationship with our clients and this has helped us achieve a double-digit CAGR for the India business over the last 3 years. The growth is driven by strong all-round performance across products like Investment Banking, Transaction Banking, Securities Services, Structured Finance and Global Markets. Each of these business lines have crossed their inflection point in the last couple of years and stand to further gain from a macro tailwind in the economy as well as the Group’s commitment to India.
This trend is in line with our global growth, evidenced by greater than $50billion annual revenues with profitability at $11billion.
