BNP Paribas set to expand services in Brazil

BNP Paribas is set to grow fiduciary services throughout Brazil as foreign rivals HCBC Holdings and Citigroup begin to exit the region. The bank plans to double its revenue from custody services in Brazil by 2020 after acquiring Mizuho Financial Group, ABN Amro Group and ICBC as clients. BNP Paribas's latest move comes as fiduciary services begin to become a key profit engine in Brazil with a custody market worth $1.41tn.

BNP Paribas grows in Brazil fiduciary services as rivals exit

By Aluísio Alves

SAO PAULO, June 10 (Reuters) - BNP Paribas SA, the world's fourth-largest securities custodian, expects to grow fiduciary services in Brazil by replacing foreign rivals exiting Latin America's largest economy, two senior executives said.

BNP Paribas' efforts to expand custody and trustee services in Brazil include offering these services to current clients who hired rivals to oversee the registration and management of their holdings, Andrea Cattaneo, the bank's head of securities services in Brazil, said in an interview on Thursday.

Expectations that foreign portfolio investment in Brazil could rise as political and economic turmoil ease are also offering opportunities for the French bank to grab additional market share, he said.

The departure of global rivals, including HSBC Holdings Plc and possibly Citigroup Inc, could also help BNP Paribas attract more clients in Brazil, Cattaneo added.

HSBC's local unit was acquired by Brazil's second largest private lender Banco Bradesco SA, while Citigroup announced in February plans to exit retail banking in Brazil.

BNP Paribas aims to double revenue from custody services in Brazil by the end of the decade, according to both Cattaneo and Antônio Nascimento, head of the bank's sales and relationships in Brazil, in the joint interview.

The strategy is helping BNP Paribas make strides after Royal Bank of Canada chose it over Bradesco as custodian bank. Other recently acquired clients in Brazil include Japan's Mizuho Financial Group Inc, ABN Amro Group NV and Industrial and Commercial Bank of China.

The strategy in the custody business is paying off. BNP Paribas has quintupled assets under custody in Brazil to 46 billion reais ($13.4 billion) since 2010, the executives said.

PROFIT ENGINE

Bank executives expect fiduciary services, including trust, depositary and custody services, to become a key profit engine in Brazil in coming years.

Loan books are growing at the slowest pace in 16 years and tougher capital requirements are forcing banks to look for additional sources of profit in areas other than lending and securities trading.

Brazil's custody market, worth an estimated 4.83 trillion reais ($1.41 trillion) as of April, is highly concentrated, according to data from Anbima, the group representing money managers in the country.

Some three-quarters of the assets under custody are in the hands of Itaú Unibanco Holding SA, Bradesco, Banco do Brasil SA and Citigroup.

Beyond clearing and settling payments for clients and investment funds, fiduciary management allows custodians to sell financial service solutions for clients.

Globally, BNP Paribas has $10 trillion under custody.