Natixis head of corporate banking prioritises green finance - Comment & Profiles -

Natixis’s CIB head talks to Kat Van Hoof about the bank’s drive for innovation in sustainable finance, building a global network and staying relevant by fostering intimate relationships with select clients.

Marc Vincent

Marc Vincent

When Marc Vincent was hired by Natixis in 2012 to head up global coverage and advisory by Laurent Mignon, chairman at the bank’s majority owner Groupe BPCE, he had already enjoyed a long career. After cutting his teeth in 1985 working for Citi’s New York mergers and acquisitions (M&A) desk, he moved back to France and took positions in corporate finance, equity capital markets and investment banking with lenders large and small over the next three decades. 

In early 2016, he accepted the mantle of co-head of corporate and investment banking at Natixis alongside François Riahi, who had worked on strategy for BPCE and for former French president Nicolas Sarkozy. “It was a very fruitful and efficient partnership, then François decided to take an assignment back at BCPE and I became the sole head on January 1, 2018,” says Mr Vincent.

Career history: Marc Vincent  

  • 2018 Head of corporate and investment banking, Natixis
  • 2016 Co-head of corporate and investment banking, Natixis
  • 2012 Head of coverage and advisory, Natixis
  • 2004 Chairman, Mediobanca France
  • 1995 Head of investment banking, Schroders
  • 1992 Head of corporate finance France, Credit Suisse First Boston
  • 1985 M&A banker, Citi

Though Mr Vincent may be an industry veteran, Natixis itself is still a relative newcomer on the investment banking scene. Seven years ago, the bank came in at a very modest 42nd place on France’s M&A league tables. In 2018, the bank finished in 14th place in terms of deal volume and ninth place in terms of revenues, according to Dealogic. 

Challenging markets

Mr Vincent is proud of the M&A business he has helped build from scratch. “Natixis has come from essentially zero revenues in M&A in 2012 to turning over €190m in revenues in 2018, without counting anything from cross-selling opportunities generated from the M&A business,” he says. “It was a great challenge to build out the advisory side. France is an active M&A market and there is strong competition from big international firms.”

The second half of 2018 was marred by turbulence in global markets, which led to a sharp drop in capital markets activity. The effect of difficult market conditions on Natixis’ bottom line was exacerbated by a €160m provision due to a ‘deficient’ hedge linked to Asian equity derivatives in December 2018. 

Nevertheless, the bank posted return on tangible equity of 10.2% in the first quarter of 2019, a figure most European peers can only dream of. Mr Vincent remains modest about the results, pointing to the drop from the 15.4% return on tangible equity in the first quarter of 2018 when markets were doing much better. Much of the damage was limited to the bank’s global markets unit. Investment banking revenues were up 6% year on year.

“Global market conditions were disappointing, but the effects were offset by the good performance in our global finance segment,” says Mr Vincent. “The focus within the investment bank is on the diversification of revenues to counterbalance the effects of adverse markets.” 

Trusted advisers

Clients have long been at the centre of Natixis’ corporate and investment banking (CIB) strategy. Mr Vincent drew upon his experience as a coverage banker to ensure this was baked into the M&A business he spearheaded. “At the time it was a big change in the mindset, but many banks have now adopted a similar attitude,” he notes. 

Wary of becoming complacent, Mr Vincent has been keen to keep on top of Natixis’ client strategy by seeing it as an ongoing process. There has been a big push recently to take the client-centric model one step further to an intimate relationship with clients, as one of their trusted advisers. “Clients often call two or three key trusted advisers when making a business decision and we want to be among those,” says Mr Vincent. 

This kind of seat at the table requires gaining intimate knowledge of the client and a clear understanding of their needs; a time-consuming and labour-intensive process. As a result, this strategy must go hand in hand with greater selectiveness about who Natixis works with to ensure it is a relevant partner for clients. “Natixis today is not a bank willing to do everything for everyone, everywhere,” says Mr Vincent.

Interest in off-the-shelf products has been waning for some time, and the bank is focusing more on strategic initiatives and tailor-made solutions. Natixis has identified four sectors in which it has developed a particular expertise: real estate and hospitality, aviation, infrastructure, and energy and natural resources. “We have studied the strategies of the main players and aim to be one of the top advisers in these fields,” says Mr Vincent.

Multi-boutique network

The way in which Natixis was able to build a strong network across various continents in these sectors in such a short space of time is perhaps unconventional. The CIB followed in the footsteps of the asset management division in building a multi-boutique network. Over the years, Natixis has acquired majority stakes in smaller boutique firms, bringing specific regional or sector knowledge to the table. 

In 2018, it invested in three new firms: UK-based Fenchurch Advisory Partners, which specialises in financial services advisory; China-based Vermilion Partners, which focuses on Chinese cross-border deals; and French technology M&A boutique Clipperton. More recently, in 2019 it added Australia’s Azure Capital, a specialist in M&A advisory for the energy and natural resources sectors, to the line-up.

“It is a unique model in that for most Natixis holds a controlling stake, but individual key managers still have skin in the game,” says Mr Vincent, pointing out that no senior managers at any of the boutiques have left since partnering with Natixis. “Shared mandates among the boutiques, where they end up working together on the same deal, have been on the rise,” he adds. While Natixis may not exactly be the only bank to employ this type of strategy, it is certainly by far the largest to do so.

Potential for expansion

At a time when most European investment banks are slimming down, it takes a particular blend of intrepidness, experience and passion apparent in Mr Vincent to expand operations. Seven boutique investments in, Natixis is not done yet, though Mr Vincent is aware of the limitations of the model. “The number of boutiques under our umbrella has to remain workable. The goal is to have a global network in our sectors, not to add more firms at random,” he says.

Though Natixis has not set a guideline for the number of boutiques it would like to work with, Mr Vincent sees a possibility for another two or three firms to be added to the roster. “Any new boutiques have to be vetted and approved by all the existing partners, an essential step in building and maintaining trust,” he stresses.

There are, however, downsides to this way of doing business. On the asset management side, Natixis has recently been drawn into the negative press surrounding one of its subsidiaries, H2O, which is under fire regarding the management of some of its bond funds. 

Green revolution

One of Natixis’ differentiating factors is a strong commitment to its green business, according to Mr Vincent. At the end of 2017, Natixis launched its Green & Sustainable Hub initiative, which brings together capital resources and expertise to drive sustainable financing. The Green Hub services both issuers and investors by bringing specific knowledge and technological and operational expertise to the table. 

Green finance has been embraced enthusiastically by Asian and European investors, and is making headway in the US. Natixis has been at the forefront of innovation in the field of green and sustainable loans and bonds. For example, it was the first to structure green commercial mortgage-backed securities on real estate in the US. Recent success stories include the award-winning €300m social bond in 2018 for Danone and the arrangement of a €100m green loan for Voltalia.

“There is an increasing push from investors for more green investment, fuelled by pressure from their asset owners, particularly younger generations. Pension funds and insurance companies are speaking to millennial clients, a vast majority of whom are asking for more sustainability in portfolios,” says Mr Vincent. 

A fast-growing area of green finance is the repackaging of green bonds for insurance companies and other bespoke green products to diversify the sustainable investment portfolio. “Natixis tailors KPIs [key performance indicators] for clients, linking them to some internal sustainability KPIs and targets covering a variety of topics, such as gender diversity, climate, health and safety, biodiversity or any other sustainability-related goals,” says Mr Vincent. 

Natixis is earnest about its sustainability mission. If the KPIs are not met, the issuer will need to pay a premium or penalty on the security. “In some cases, the structuring process leads us and our clients to make the decision that the penalty paid by either party could be put towards a third-party organisation, such as an association with strong sustainability goals, to ensure the funds go to the cause no matter what happens,” says Mr Vincent.

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