The Royal Mail is one of the most recognisable corporations in Britain. When acquisitive Czech billionaire Daniel Kretinsky set his sights on it earlier this year, he selected BNP Paribas to advise him.

Although clearance from the UK government is still required for the 3.57 billion pound ($4.63 billion) buyout of Royal Mail’s owner the mandate demonstrates the French bank’s goal to enter the highly competitive City market, which is dominated by regional and American “bulge bracket” investment banks.

In order to do this, the largest bank in the eurozone based on assets has been enlarging its clientele for corporate broking and strengthening its M&A departments.

For BNP’s investment banking unit, which has grown internationally throughout CEO Jean-Laurent Bonnafe’s 13-year tenure, expansion and brand recognition in one of the world’s leading financial centres are critical components of his ambitions.

Sales of investment banking were the primary factor behind the group’s 21% year-over-year improvement in second-quarter earnings, which BNP said on Wednesday.

“Instead of exact market shares, my goal is to become one of the standard suspects,” stated Matthew Ponsonby, who joined BNP’s global banking division in the UK in 2017 after leaving Barclays, to Reuters during a London interview.

A portion of the booming UK deals industry is up for grabs. There were 38 enterprises up for grabs in Britain at the end of April, the most since June 2022, according to Peel Hunt.

As of now in 2020, revenues from consulting fees connected to mergers and acquisitions have increased by 38%, according to Dealogic. The 995 million pounds total generated thus far this year is somewhat behind the 1.06 billion pounds generated during the same period in 2023.

In terms of sales, BNP’s investment banking division in Britain came in at number fifteen with a 2.2% market share in 2023. According to Dealogic, German competitor Deutsche Bank came in eighth place, while the top three banks were Barclays, Goldman Sachs, and JP Morgan.

The French lender filled the hole left by some of its larger competitors during the COVID-19 epidemic in 2020, although its market share last year was less than that of 3.5% BNP.

Although she acknowledged the fierce competition, Emmanuelle Bury, country head of BNP Paribas in the UK, stated her team will concentrate on assisting UK companies in obtaining foreign funding in order to generate new business. In an interview with Reuters, Bury stated that BNP had “space to grow our market share”.

One approach to do this is for the bank to serve as a corporate broker for a larger number of blue-chip businesses that are listed on the UK stock exchange. Public UK corporations are required to designate a bank or securities company to serve as a crucial middleman between them and their shareholders.

Although BNP’s corporate broking division lags behind competitors significantly, its clientele has increased from one in 2020 to seven last year, including discount retailer B&M, airline easyJet, and alternative asset fund management organisation Bridgepoint.

Adviser Rankings Ltd. ranks BNP as the fourteenth bank in the United Kingdom. Another customer, Coca-Cola Europacific Partners, is a distributor and bottler of Coca-Cola goods. Together, they account for more than half of the 50 billion pounds of market capitalisation of all of BNP’s corporate broking clients.

According to the market research source, industry leader Morgan Stanley had clients worth 881 billion pounds as of May 2024, ahead of JP Morgan (844 billion) and UBS (695 billion).

BNP, which has 8,000 employees in the UK and 70 billion euros in outstanding loans to British firms, has not attempted to buy its way into corporate broking in order to accelerate its growth and increase its footprint, in contrast to some of its larger competitors.

In addition to equities research, JPMorgan had access to a distinguished clientele that included several FTSE 100 businesses through its 2009 acquisition of British stockbroker Cazenove.

In order to increase the number of UK corporate customers and institutional investors it serves, Deutsche Bank acquired Numis, a boutique investment bank with headquarters in London, for around 410 million pounds last year.

BNP, on the other hand, has prioritised “organic growth,” investing in its fully-owned operations as opposed to pursuing ambitious goals.

The investment bank’s final significant transaction occurred in 2022 when it acquired the prime broking division of Deutsche Bank, which the German institution had sold off as part of a restructuring strategy.

Dealmaking is one of the areas in which BNP wants to become more visible. With the recent addition of a managing director from Perella Weinberg Partners (PWP.O), it now has 13 members in its UK-focused advisory team. It launches new tab to increase the number of private equity clients it serves.

The French bank hired Tom Snowball, a former executive director at UBS, to lead its UK equity capital markets business, and Kirshlen Moodley from JPMorgan to lead its UK M&A team in 2021.

It seems like such efforts are having some success.

In Dealogic’s M&A league tables, BNP was rated 130 by volume in 2022. However, by 2023, it had risen to the 36th slot, and as of now, it is ranked 8th.

However, the bank’s gain in terms of income has been less striking; according to the statistics, it moved up from 52nd in 2020 to 47th this year.

According to some observers, the French bank still has space to expand.

“They have demonstrated the ability to contend with the larger bulk brackets,” says Morningstar analyst Johann Scholtz. “They are increasingly becoming seen as the CIB (corporate and investment bank) that clients wants to use with specific reference to Europe.”

(Adapted from Reuters.com)