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InterviewsSeptember 15 2021

A moment of truth for Natixis

Natixis CEO Nicolas Namias outlines his ambitions for the firm, following its recent delisting and acquisition by BPCE.
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A moment of truth for Natixis

Natixis is in the middle of a defining moment. In July 2021, the French financial services firm, which had been publicly listed since December 2006, delisted after its majority shareholder, BPCE — France’s third-largest banking group — took over the 29.3% stake that it did not previously own.

The acquisition, which had been announced in February 2021, was enacted with the aim of bringing Natixis into a simplified BPCE corporate structure, providing greater strategic flexibility and creating a strong foundation for future growth. It is now for Nicolas Namias — Natixis’s CEO since August 2020, and former BPCE deputy CEO and chief financial officer (CFO), as well as Natixis’s former CFO and head of strategy — to make good on those aims.

Challenging times

It has been a challenging period for Natixis in many respects. It struggled with losses in equity derivatives in the first half of 2020. Losses at one of its most prominent asset management subsidiaries, H2O, also put its multi-boutique asset management model under scrutiny. In November 2020, Natixis announced that it would be winding down its partnership with H2O during 2021.

Mr Namias is now focused on decisively moving forward. In equity derivatives, he says the bank has made adjustments to lower its risk levels. “We have set a new risk appetite,” he says. “This includes our equity derivatives products, where we have reduced the number of products we are offering, stopped high-risk products and tightened exposure limits on low- and medium-risk products. We are pleased with the outcome of this as, in the first half of this year, we have seen some good results in equities.”

We have made a really clear choice within BPCE for Natixis to be on the growth side

Nicolas Namias, Natixis

On the asset management side, he describes the unwinding of the partnership with H2O as a key strategic decision to enable the group to move forward. However, Mr Namias emphasises that Natixis remains a major player in asset management and the severance does not reflect any wider strategy, as shown in November 2020, when Ostrum Asset Management (OAM), an affiliate of Natixis, completed its merger with La Banque Postale Asset Management. Following this transaction, he says: “We are the second-largest asset manager in Europe and the 15th-largest asset manager worldwide, so it was a very important transaction for us.”

The bank also remains committed to its multi-boutique model, as Mr Namias believes it delivers the best value for clients. “Each affiliate is really specialised and has the best expertise dedicated to its clients around its investment strategy, as well as people that are very committed to the success of the affiliate,” he says.

However, he also says this must be paired with strong oversight and risk management at a central level. “We have been investing for the past year in reinforcing that oversight framework.”

In addition to this approach, which applies to its active asset management businesses — which accounts for the majority of its activity — Mr Namias says the bank is also developing a second pillar within OAM that offers a low-margin, liability-driven investment (LDI) strategy aimed at insurers.

In recent months, his bigger focus has been the bank’s longer-term development. “When I took on the role, the initial mandate comprised two main areas,” he says. “The first being to address the small number of immediate issues experienced during difficult market conditions in 2020, so that we could get back to the core focus of delivering value for clients. We have since been building our momentum and in the second quarter of 2021 all of Natixis’s businesses generated solid results. 

“And the second [area], looking forward, is to define the strategy for Natixis’s business lines’ future development out to 2024.”

Driving growth

Mr Namias is clear that the 2024 strategy is one of “development and growth”.

“At the moment, we see a lot of banks that are pursuing more of an attritional strategy,” he notes. “We have made a really clear choice within BPCE for Natixis to be on the growth side and the plan is an important statement about that.”

Mr Namias is positive about the BPCE acquisition, saying that “the fifth-largest banking group within Europe is ready and willing to provide resources for the development of Natixis’s businesses”.

As part of bringing Natixis fully into its corporate structure, BPCE has created a global financial services (GFS) division, including Natixis’s corporate and investment banking (CIB) business alongside Natixis’s asset and wealth management businesses (Natixis IM). Together, GFS is expected to contribute about 28% of BPCE’s revenue. “We have very clear goals for these businesses that not only build on our existing areas of expertise, but will also develop new, selected, diversified expertise based on our entrepreneurial approach,” he explains.

There are three pillars to GFS’s development plans: diversify, commit [to environmental, social and governance (ESG) goals] and transform, with plans in both CIB and IM to diversify clients and geographic footprints.

For Natixis IM, this means building on its two existing main markets in France and the US, and leveraging distribution partnerships to reach a broader range of geographies and clients beyond its distribution footprint across more than 20 countries. It also aims to strengthen its performance across four key areas: high-alpha strategies, private assets, LDI and quantitative investment management. “Today we are the 15th-largest asset manager, globally, by assets,” says Mr Namias. “We want to move our way up that ranking and be a leader, and are targeting net inflows of €100bn between now and 2024.”

For the CIB, it has ambitions to become the “go-to” European bank for international clients, building up its businesses in the Americas and Asia-Pacific from an existing foundation where non-French revenues already account for 55% of net revenue. “Natixis CIB’s DNA is very much based on its areas of expertise,” Mr Namias says. “We do not wish to move away from that approach, but instead to diversify the areas that we have solid expertise in.”

Mr Namias adds that under the 2024 plan, Natixis CIB’s focus is being doubled from four core sectors (infrastructure, aviation, real estate and hospitality, and energy and natural resources) to eight, with healthcare being a key growth sector.

Moving forward

The challenges for European banks competing with their larger US counterparts have been well-documented. While Mr Namias is ambitious and optimistic about Natixis’s prospects on the global stage, he is also pragmatic about the competition. “We will not compete on the basis of our size, because we are not the largest, and therefore we rarely compete based on price. We have key areas of expertise for which we are recognised, where we can deliver real value for clients and on which we can differentiate,” he says.

Mr Namias highlights certain product spaces that are areas of strength, such as equity derivatives and securitisation, as well as sectoral specialisms, such as sustainable finance and energy transition. “In the energy sector, we were historically very strong in oil and gas, but now our focus is on accompanying our clients in their transition,” he explains.

Indeed, Natixis has already established itself as a leading player on ESG, and it plans to double down on this. “I want to position Natixis as the bank of the transition,” says Mr Namias, “and we cannot be only a bank for emerging companies that are bringing pure green technology to market. Of course, we are a bank for these players, but we have a strong conviction that the transition will encompass both new and traditional players. Our responsibility as a large bank is to finance the transition of the more traditional players.”

Mr Namias wants to leverage Natixis’s existing expertise in this area to continue pushing the envelope of what it possible. “We want to go beyond the issuance of pure green products, such as green bonds, by providing our clients with all kinds of solutions linked to a range of ESG objectives. And I believe that’s very powerful,” he says.

Finally, Nataxis will be investing in its internal infrastructure — such as in technology and compliance, and in new and existing talent to boost its capabilities — to the tune of €400m in technological infrastructure and €190m in innovation over the period.

As part of the restructuring, Natixis’s insurance and payments businesses are becoming part of a consolidated retail division for the whole BPCE group. Mr Namias reflects that a more streamlined structure for Natixis allows it to more explicitly focus on international aspirations. “We have been able to differentiate the retail parts of the business, which were more French in focus, and to define our GFS division,” he says. “The new organisation of the group clearly highlights our ambition in terms of international development.”

“Tight risk management” is also an important theme in the wider Groupe BPCE strategy, and Mr Namias is cognisant of the challenges that evolving market conditions may pose. While he is confident that Natixis is putting the right framework in place through its revised risk appetite and its investment in risk management infrastructure, he says the bank must remain mindful of the challenges of valuing assets during a point of high liquidity and low interest rates. “Of course, I’m very happy that we are seeing high levels of capital raising and mergers and acquisitions activity, because we are here to support our clients, this is an issue we are keeping in mind day-to-day,” he notes.

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