Expansion can be one of the greatest challenges, but also one of the greatest opportunities for a firm. David Raccat, head of global markets, and head of market and financing services (Asia Pacific) for BNP Paribas Securities Services, discusses the firm's strategy for becoming more global.
For BNP Paribas, expanding globally as a business has been an important focus in 2014.
David Raccat, head of global markets, and head of market and financing services (Asia Pacific) for BNP Paribas Securities Services, has experienced this first hand.
In August, BNP Paribas Securities Services launched an expansion plan in the Asia-Pacific region, where it has three main client and operational centres in Hong-Kong, Singapore and Sydney.
A specialist in securities lending, Raccat moved out to Singapore from the firm’s primary base in Paris, to work on building the business’ presence in the Asia-Pacific region.
In September, he took on the role of head of market and financing services for Asia Pacific, alongside his existing role as head of global markets.
Raccat says that there is a lot going on in the region for BNP Paribas, as its custody franchise progresses, securities lending is bedded in and communications begin with prospective clients.
“I moved to Singapore and honestly for me it’s a very, very exciting move… I have spent a lot of time on developing the franchise in Asia Pacific, but there is still a lot to do because we have more and more clients coming in,” he says.
He adds that with demand increasing the timing is perfect, as the project has provided many opportunities and also aligns well with the firm’s general ambition to become more global.
BNP Paribas is currently present in 13 Asia-Pacific markets, including Malaysia, Taiwan, China and Vietnam. The firm has more than 15,000 employees in the region and counts €2.5 billion in revenues, approaching its target of more than €3 billion by 2016.
However, geographical expansion has not been BNP Paribas’ only focus this year. Raccat also says that automation is an important challenge for the business. With the pressures of increasing regulation, moving from manual to automated systems is proving a key advantage in many areas of the fund industry.
“We need to make sure that our investments are following in order to be on top of the game and not have some manual processes or inputs left when we could automate most of the business, that’s important for us,” he says.
Raccat adds that another result of greater regulatory pressure is a focus on developing more structured products, which is work in progress for BNP Paribas Securities Services.
He believes that capital requirements as a result of regulation are presenting new challenges, and making borrowing securities at low fees increasingly unprofitable. Raccat predicts that traditional methods will disappear little by little, and therefore feels it is logical for the firm to move away from these models and towards something more complex.
“It is a more structured trade where we are pushing the maturity a little, we are pushing the quality of the collateral a little, and we are moving securities lending into more synthetic products,” he says.
“It is a good opportunity in terms of developing our product range. To create value and to be noticed in new markets we need to develop some new structures.”
The firm has been moving ahead with synthetic products, through developing the ability to refinance and provide more illiquid collateral.
“We’ve been very cautious in our credit and risk approach, but this is a trend we are seeing in the market,” Raccat says.
“It is developing in new markets too, such as Taiwan, where we see a lot of opportunities for the future.”
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