2 posts tagged “france”
Charismatic leadership is much needed at BNP Paribas
Don’t you find something slightly irritating about BNP Paribas? The European bank has the ingredients to be a global superpower but lacks the magic that has made Barclays Capital such a success and turned Deutsche Bank into one of the most powerful securities trading houses in the world.
A Deutsche banker said: “BNP Paribas has a great corporate business but it doesn’t have the same skills in investment banking as Goldman or Lehman.”
Is it because the bank is too risk averse? I don’t think so. In equity derivatives, a business that is almost totally suited to French business psychology, BNP Paribas understands risk almost as well as its rival Société Générale. Did BNP Paribas and SG miss the boat in credit derivatives? Perhaps, but both have caught up to the market leaders.
Some believe BNP Paribas is too French. Former insiders say the issue of low pay and sometimes stingy bonuses have been resolved but all roads continue to lead to Paris. It probably helps to be French when promotions are made but that is not so different from Japanese securities houses or Commerzbank and Dresdner Kleinwort. Deutsche Bank and Morgan Stanley are the most international operations.
The French possess awesome maths skills, which is why so many have become celebrated hedge fund managers but, for reasons that remain difficult to understand, they rarely excel in pure investment banking. Those who do may work for Lazard in Paris but most gravitate towards the US, where they are appreciated and well-paid.
You only have to look at non-French bankers who have left BNP Paribas in the past eight years to see they did not always believe they were playing on a level promotion field.
BNP may have missed some chances when it acquired Paribas six years ago. SG wanted to elope with Paribas. However, BNP was not about to let the prize slip away, as it had always coveted SG. BNP walked away with Paribas as the consolation prize and SG was left on its own.
It was something of a farce, with the French banks not shown in their best light and foreign banks, which were interested in the proceedings, being told to stay away. The rules were devised by the Bank of France and the Elysée.
But the outcome wasn’t a disaster. Paribas brought excitement to BNP, which had been considered one of the dullest banks in Europe. I remember being invited to lunch at its dreary offices near the Bank of England and being greeted by a group of middle-level Euromarket managers who had worked elsewhere and clearly regarded BNP as a rest home. Where are they now?
Paribas, on the other hand, was regarded in London as one of the slickest operators in the Euromarkets. In true French fashion, it was ahead of the game in complex structured products and received awards for derivatives house of the year.
“BNP didn’t deserve Paribas but at least it had the common sense to appreciate the skills of its best managers,” said an SG director. SG has fared well on its own. It is perceived as exclusive and gives the impression that it is ring-fenced by the French government.
With its US and Italian acquisitions, no one can say BNP Paribas lacks critical mass or has fallen behind in market value rankings. Its shares have attracted foreign institutional support, although some asset managers believe SG shares are the best in French banking. But why did BNP Paribas allow other European groups to leave it behind in investment banking?
The response from Paris points to the size of the business when corporate banking is included. That was the argument put by the accomplished Philippe Blavier, who claimed he ran one of the largest quasi-investment banks in the world.
I wanted BNP Paribas to become the number two investment bank behind Deutsche in continental Europe. But it has plodded gently along and competed more with ABN Amro. BNP Paribas, where Blavier has been succeeded by Jacques d’Estais, might be looking at the operations of Deutsche or Barclays Capital and saying: “Why aren’t we in some of those businesses?”
I have said charismatic leadership is essential for an investment bank or an operation that combines corporate banking. Barclays Capital has Bob Diamond, who leads from the front, and where would Deutsche Bank be without Anshu Jain and Josef Ackermann? Goldman Sachs in Europe has the feisty Michael Sherwood. Lehman has Jeremy Isaacs, who is a power behind its success in Europe.
The French are not particularly known for being publicity seekers but in the past few weeks, Jean-Pierre Mustier at SG and d’Estais, his counterpart at BNP Paribas, have talked to the press. Mustier has an awesome intellect but does not court the limelight, nor is d’Estais a natural showman.
As I know about Mustier’s success, I was more interested in the profile of d’Estais. He is not out of central casting, as his predecessor Blavier was, but when you talk to people who used to work at BNP Paribas, they say d’Estais, a former bond and derivatives trader, was in the right place at the right time, a member of the inner circle, and French. These are sound qualifications but they may not be sufficient to bring him up to the management mark of Jain.
Does he have the vision of a Hans-Jörg Rudloff, who can see goldmines where most competitors would fear to tread? Could he build an investment bank in the competitive US market in the same way as John Costas at UBS?
The message from Paris is that d’Estais is not expected to be a combination of Superman and the late John Pierpont Morgan. “Jacques will follow the consensus view and let the earnings momentum of BNP Paribas do the rest,” said a former Dresdner Kleinwort managing director.
When Blavier left, my relationship with BNP Paribas deteriorated as I criticised management changes. I do not pretend to be right all the time and I have eaten enough humble pie to justify hiring my own pastry cook. However, I thought the proposed BNP Paribas management reorganisation was woolly at the time. It had the opportunity to make a mark on Wall Street, usually a graveyard for foreign banks.
Are the French afraid of taking on the Americans on their own turf?
D’Estais makes a good impression without saying much. He is keen to expand into Europe, but who isn’t? Does he believe BNP Paribas can make an impact in corporate finance and M&A outside France? If he is successful, he would become a national hero, as so many others have failed.
D’Estais is realistic enough to admit that corporate finance is a lead for new business, rather than a big profit centre in its own right. Don’t expect fireworks or the bank to act on impulse. This probably means some opportunities will be allowed to slip by but shareholders will sleep peacefully in their beds.
a nice article about the state of entrepreneurship in France, by Business week La Vie Impossible Yes and no. The state has been trying to sweep away many of the outdated laws and regulations that have made life complicated for small-business owners. But French entrepreneurs continue to face cultural, bureaucratic, and financial hurdles. Even the government acknowledges that most businesses created each year are tiny, with scant prospects for growth. Says Philippe Bloch, co-founder and former chief of Columbus Café, a chain of espresso bars in and around : "You have to be crazy to be an entrepreneur in ."
Paris is encouraging entrepreneurs even as it continues to hinder them
Caught in a sort of no-man's-land between the powerful state and the heroic worker is the small businessman. It's not always a pleasant place to be. "In , a self-made man is viewed as a sort of scoundrel or gangster," says Francis Holder, the 66-year-old founder and CEO of Holder Group, an industrial baker that supplies McDonald's Corp. in and operates a chain of more than 300 boulangeries in Europe, Asia, and the
Holder's experience is instructive. The son of a poor baker, he overcame enormous odds to build his business. He worked 18-hour days, endured several near-death business experiences, and was forced to be much more competitive than the culture generally tolerates. Were Holder in , he would be feted as a classic up-by-the-bootstraps success story. Not in . Despite creating thousands of jobs, Holder remains an outsider in the clubby world of French business and politics. "In ," says Holder's son Maxime, "a soccer star scores a goal and gets the Legion of Honor. My father is not likely to ever get it."
If Renaud Dutreil had his way, people like Holder would be accepted and even celebrated by their countrymen. Dutreil is Minister of Small & Midsize Enterprise. Before his arrival in 2002, the ministry was a backwater. But Dutreil, 46, is quite unlike his predecessors. He remembers the humiliation he felt as a teen when his father's tannery went bankrupt. And he has set out with a passion unheard of in to help small businesses.
Dutreil's achievements so far will seem banal to an American. For example, he ditched a law that had made it illegal to run a business from home. He also led the charge to cut taxes, ease financing requirements, and lighten bankruptcy penalties. And to help boost animal spirits in a nation where fear of failure is endemic, Dutreil has twice crisscrossed in a special train to meet with entrepreneurs. He says the reforms have helped cut the jobless rate from 11% to 9%. "By most countries' standards, we're doing nothing original," he says. "But for , creating a culture of growth is very new."
BEWARE THE CODE
Problem is, there's only so much Dutreil can do to restrain the heavy hand of the state. His power does not extend to the infamous Inspection du Travail. The agency, whose origins date to Napoleon, was set up to ensure that companies aren't exploiting workers. Today, some 2,000 inspectors troll the business byways of looking for people who are working too hard.
A couple of years ago, Columbus Café founder Bloch ran afoul of the Inspection du Travail and found himself in criminal court. An inspector had noticed that one of Bloch's managers had worked 10 hours longer than the state-mandated 35 per week. The fact that she was filling in for no-shows didn't matter. Bloch, now 47, was found guilty of "obstructing the duties of an inspector" and slapped with a suspended fine of 2,000 euros (just over $2,500 at today's exchange rate). "I was sitting between two guys, one charged with killing three people, and [one] charged with raping his secretary in the parking lot," he recalls. "I said to myself, 'What the f--- am I doing here?"' French officials say the laws protect workers. Still, they concede that the Inspection du Travail can come on a little strong. Says French Budget Minister Jean-François Copé: "Our people are sometimes aggressive."
Then there's the massive 2,732-page Code du Travail. The laws are so complex that even small companies spend thousands of hours a year ensuring that they are in compliance. Augustin Paluel-Marmont, 30, runs Michel et Augustin, a maker of cookies and breakfast snacks that's loosely modeled on Ben & Jerry's Homemade Inc. (UL ) Despite having just seven office staffers, he employs a full-time head of human resources who spends his days running around trying to locate official forms and then filling them in. Says Paluel-Marmont: "Your first hire must be a human resources manager, or you're dead in the water."
If the overweening state doesn't drive French entrepreneurs to distraction, the business Establishment might just finish the job. Amélie Faure, CEO of Pertinence, a small software company that helps the likes of Wyeth (WYE ), BMW, Airbus, and Siemens (SI ) boost manufacturing efficiency, says dealing with her own countrymen can be maddening.
After agreeing to buy her products, the subsidiary of a French aerospace conglomerate failed to pay on time. A lengthy renegotiation ensued, and at the end of six weeks of haggling, Faure, 42, walked away. "They spent months trying to get us to lower our price by 10,000 euros," she says. "But every month they had our product would have saved them 200,000 euros. This was very stupid and frustrating -- a real waste of time."
In the end, many French with entrepreneurial yearnings jump ship. Every year, thousands of France's most promising youth decamp for London, New York, Silicon Valley, and beyond to seek their fortunes. They may vacation at their families' country houses in Normandy, Brittany, or the Côte d'Azur. La belle vie, after all, will always be in France. But their business dreams, they figure, will come true more easily far from the reach of the Inspection du Travail.
