Martin Egan, global head of primary markets and origination, and Arne Groes, global head of distribution, at BNP Paribas

BNP Paribas has had a good crisis. Now, after a reorganisation at the top level of the investment bank, the challenge is to consolidate the gains it has made and expand its US and Asian presence, a task that its new global head of primary markets and origination and global head of distribution are relishing. Writer Geraldine Lambe

Changes are afoot at BNP Paribas. In May, the bank completed a major fixed-income reshuffle that saw David Brunner promoted to the newly created role of deputy head of fixed income and his previous role as global head of origination and distribution split in two. Martin Egan, former global head of primary markets and securitisation, has been appointed global head of primary markets and origination, giving him global responsibility for all the bank's debt syndicate, securitisation and capital markets origination activities. Arne Groes, who joined from ABN Amro in 2008 as global head of flow-credit trading, has become global head of distribution, responsible for all sales to financial institutions and investors. All three will report to Frédéric Janbon, global head of fixed income.

The reorganisation aims to build on the gains the bank has made during the crisis. Fixed-income revenues have doubled between 2006 and 2009 - excluding the cost of risk - and front-office staff numbers have increased from 1600 to almost 2000 in the same period. The expansion is reflected in the league tables, where BNP Paribas has continued to cement its position as one of the top European bond houses. According to data from Thomson Reuters, for the full year 2009 BNP was ranked first for all bonds in euro, eighth for all bonds in all currencies, third for bonds in Swiss francs and fifth for all corporate bonds in sterling.

Cultivating connections

The bank has also made meaningful gains in foreign exchange (FX). According to the Greenwich survey for 2009, published in April this year, BNP Paribas has increased its presence among all financial institutions, ranking 10th for market penetration and growing its market share from 2.2% to 2.8%. Regionally, BNP Paribas has doubled important 'top-three' relationships with European financial institutions and saw increased e-trading penetration on third-party systems. The bank also ranked 10th in market share for local market currencies and FX options. In its corporate business, BNP Paribas now ranks in the top five globally in terms of market penetration, with an estimated market share of 5.1%, which puts it in seventh place with top-tier corporate clients worldwide. In Europe, BNP Paribas is ranked first on the crucial 'top-three' relationships, and third on overall service quality.

"The strength of the bank has helped us to make real gains in terms of clients and market share during the crisis, and the reorganisation will ensure that the bank is able to sustain and build on that," says Mr Egan.

The reshuffle is part of a broader push across the investment bank, where BNP Paribas wants to boost its US and Asian footprint and significantly grow investment banking revenues. To this end, in May the bank acquired Hill Street Capital, a New York-based investment banking boutique formed in 2001. In Europe, the investment banking drive will be supported by a new initiative, also announced in May. The Investment Banking Europe division, to be headed by Thierry Varène, global head of corporate finance, will bring together a dedicated investment banking team covering the bank's 200 top European clients. According to Alain Papiasse, head of BNP's Corporate and Investment Bank division, the aim is to be a top-five investment bank.

Fixed income remains the engine room of the investment bank and is a major element of BNP Paribas' expansion. The bank has already hired 200 front-office staff this year and the plan is to recruit a further 250 people by the end of 2010, of which 60% will be in sales, with the majority focused on institutional sales to investment managers and hedge funds.

Although BNP Paribas gained market share in credit as it stepped into the liquidity gap caused by other banks' retrenchment during the crisis, credit remains relatively weak compared with the bank's core strength in rates and its growing foreign exchange platform. "There is room to develop our credit business and this is a significant part of recent changes," says Mr Egan. "They are designed to deepen our position in credit so that it complements our rates and FX businesses."

As part of the fixed-income reorganisation, in March this year, the bank made two other key changes. Christian Mundigo, previously global co-head of the interest rate group and head of fixed-income trading in the Americas, and Benjamin Jacquard, recently named global head of structured credit and arbitrage, have been appointed global co-heads of credit trading. In the newly created roles, they will oversee all global credit activities, structured and flow, as well as fixed-income arbitrage.

Mr Mundigo will continue as head of fixed-income trading in the Americas as part of BNP Paribas' efforts to aggressively grow its US business across all areas of fixed income. It has made 43 new hires so far this year, building on 2009 recruitment, and the fixed-income division now has close to 500 front-office staff dedicated to the Americas region. The bank intends to hire another 77 people across its US rates, credit and FX businesses.

"We have made some big strides in the US and this will continue to be a major focus for us in 2010 and 2011," says Mr Egan. "The challenge going forward is to hold on to the dramatic gains we made in 2009 now that the competition is once again very fierce."

Asian growth

Building out the bank's dollar business is also crucial to growing its Asian presence. "We have a Corporate and Investment Bank division-wide plan to enhance our presence in Asia, and fixed income is central to that," says Mr Egan. "Our rates and FX business has always been strong in Asia, but we need to build out in credit. Our US plans will play well to our Asian business, but we also have a specific plan to grow in the local currency markets."

The bank already has big operations in Hong Kong and Singapore, and is looking to expand its nascent onshore presence in China and India. "Like everyone, we are building our operations in Asia. The potential is just too staggering to ignore," says Mr Groes.

In another element of the global reshuffle, BNP Paribas recently announced that Patrik Sandin, previously global head of restructuring, fixed income, has been appointed head of origination and distribution in Asia, excluding Japan.

As is the case with many other banks, growing the flow business - especially in US dollar volumes - is a key target. But with all banks targeting flow, is there enough to go around? Mr Groes says the bank cannot afford not to build in flow, but argues that not every bank will be successful. As bid/offer spreads tighten, clients expect banks to warehouse some risk, and only those with strong balance sheets will be able to market-make those flows. "It is no coincidence that all the big banks are targeting flow products; that's the way the business is going. It has economies of scale and there are certain barriers to entry. Big banks with balance sheet will have an advantage," he says.

Last year, BNP Paribas put in place a three-year growth plan to become a top-five credit sales and trading house in the US by 2012, and now the bank is in the second phase. "There are plenty of opportunities to grow market share organically. We have hired aggressively and will continue to do so," says Mr Groes.

Although the US has been the graveyard of many European ambitions, Mr Groes believes that there is still a unique opportunity - both in terms of clients and bankers - in the wake of the financial crisis. "There are fewer competitors for market share and there is top talent out there. It is sometimes very expensive, so it's a question of whether you are willing to pay for it; but at least there are good bankers available."

Top-level hires

The bank has been able to attract bulge-bracket bankers. For example, Jared Epstein joined from Morgan Stanley last June as head of flow credit trading for North America. In March, he was joined by John Price and Rob Barrett as managing directors on the bank's credit flow trading desk in New York. Mr Price, who worked at Lehman Brothers for 10 years, joined after 12 months at institutional fixed-income broker Knight Libertas. Mr Barrett, who spent 22 years at JPMorgan, joined after a stint at fixed-income broker Christopher Street Capital, part of the interdealer broker GFI Group.

In the midst of the crisis - when fears over counterparty credit risk were at their height - BNP Paribas gained new clients attracted by the bank's balance sheet strength and credit rating. As counterparty fears have receded, that advantage has been eroded, but not disappeared, says Mr Egan. "Clients are still looking to diversify their counterparty risk. I've never seen clients so open to building new bank relationships, as long as you can prove that you are relevant across the product set, globally."

As the global economy faces growing sovereign debt fears and increased market volatility, Mr Egan believes that BNP Paribas can leverage the gains it made during the financial crisis. "We are in the middle of another crisis and what we learned from the first crisis will serve us well in this one. Clients want strong banking relationships and consistent product coverage. We demonstrated that consistency to our clients through the financial crisis, and the bank's recent changes and growth plans will build on that."

Career history

Arne Groes

2010 - Appointed global head of distribution.

2008 - Joins BNP Paribas as global head of flow credit trading.

1998 - Joins ABN Amro in interest rate, emerging markets and credit trading. Promoted to global head of financial markets trading.

1995 - Joins UBS in Scandinavian and emerging market government and swaps trading division.

1990 - Joins Credit Suisse First Boston in frequent user sales, then moves to swaps trading.

1980 - Joins SE Banken in treasury sales.

Career history

Martin Egan

2010 - Appointed global head of primary markets and origination.

2008 - Named global head of primary markets, global head of debt syndicate, global head of debt capital markets and securitisation.

2001 - Joins BNP Paribas as global head of debt investment grade syndicate.

1993 - Joins Credit Suisse First Boston as director and syndicate manager.

1985 - Joins UBS as a trader.

1982 - Joins JPMorgan in trading desk support.

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