Fortis chief executive Jean-Paul Votron tells Stephen Timewell how the bank is extending its reach through acquisitions, joint ventures and white-labelling – and plans to grow a global footprint.

Six million customers in the Benelux countries and Turkey use Fortis’s integrated banking and insurance services. But Belgian chief executive Jean-Paul Votron is keen to extend his group’s core competences well beyond its Benelux roots and tap into the enormous demand for financial products of the rising middle classes stretching from Poland to India and China.

Since taking over in October 2004 after long stints at Unilever and Citigroup, Mr Votron has brought new dynamism to this diverse group, whose overall net profits rose by 32% in 2005 to €3.9bn, one-third coming from insurance. In explaining Fortis’s six business segments and their contribution to net profit (merchant banking 27%, retail banking 23%, commercial and private banking 13%, insurance Belgium 13%, insurance Netherlands 15%, and insurance international 6%), Mr Votron hopes to use its multi-channel distribution strategy to increase profits from outside the Benelux states to 30% by 2009 from 18% today.

Domestic retail leader

In retail, Fortis remains the dominant player in Belgium with 1128 branches and 20%-30% market share in some products. But retail is far from static, with the number of online clients rising by 25% last year to one million and the number of internet transactions now equalling the number of branch transactions. Along with more flexibility through increased opening hours, Mr Votron says that Fortis is a key insurance supplier in Belgium with 20% market share and its core ability to sell through both the branch network and the internet.

Central to Fortis’s strategy is not only the power of the brand, but also its core competence at multi-channel distribution. Unlike other banking groups that offer a multi-brand approach, such as Unicredit, Fortis took a strategic decision to go for one brand. The chief executive promised early last year: “Fortis will act as one company under one flag.”

Mr Votron emphasises: “Clients must have trust in the products and must be able to differentiate and identify them.” He takes great pride in noting that just five months after buying Turkey’s seventh largest privately owned bank, Disbank, in April 2005 for €987m, Fortis was able to complete the rebranding by November.

Turkish network

The Turkish acquisition represents leveraging of not only Fortis’s sales competences, but also the country’s fast gross domestic product growth of almost 8% and a growing middle class. The bank plans to expand its Turkish network from 180 to 300 branches and focus on desperately needed financial products, such as mortgages and insurance.

Besides Turkey and growth economies such as Poland, India and China, the bank is looking elsewhere in Europe and Asia but is definitely not interested in retail in the US. Last year, Fortis was granted the first operating licence for the new company pension scheme in China.

Joint ventures

One key means of growth is through joint ventures and, last year, Fortis acquired a 51% stake in a joint venture, Millenniumbcp Fortis, with Banco Comercial Português for €514m. The joint venture is now Portugal’s biggest bancassurer.

With joint ventures with Malaysia’s Maybank and La Caixa in Spain, Fortis is using its skills to market financial products through a variety of channels, which include Belgium’s network of 1000 post offices. Also last month, a joint venture agreement was announced in which Fortis would provide financial services in Ireland through Irish post office An Post’s network of 1450 branches.

White-labelling

Fortis is also expanding in consumer finance where Mr Votron says a credit card production facility in the Netherlands is “very good at white-labelling credit cards for retailers. We are looking at exporting this skill to retail chains in Belgium and beyond”.

Given the various white-labelling opportunities, post offices sales agreements and other joint ventures, Fortis is optimistic about the range of channels that it has available for selling financial products. The bank’s retail strategy is built around the ‘big engine’ of Belgium and its core Benelux region but it is also keen to develop in Europe, as the acquisitions of Disbank and German consumer finance bank Von Essen demonstrate.

Mr Votron also believes that Fortis’s competences can be exported further abroad, especially in selective Asian markets. “Retail is a matter of distribution,” he says. He believes that Fortis has the number of distribution mechanisms needed to allow retail profits to continue to match last year’s high growth rate of 59.3%.

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