BNP Wouldn’t Be Interested in Commerzbank, Chairman Lemierre Says

Well, look, I think the ECB is right when they say that there is a need to continue to restructure the banking sector in Europe. There is a need for it after the crisis; it is not yet over. We, in various countries, at the same time, merger consolidation, cross-border merger, not easy. You know, you need a business case, and business case is difficult in the current environment: flat interest rate curve, capital requirements. Business is not so easy, so it is risky. People have to make a clear assessment of the situation before making a decision. This is what we have seen in the recent case of Deutsche Bank and Commerzbank. So it takes time, and once more, you need a business case to do it.

The answer would be no.

Well, I say no. At the same time, of course, we are consolidating market shares, which is a different notion. You have the consolidation of entities, banks, but then we also grow in Germany. We have good clients and we are very happy growing the business and the activities in Germany. That's the big difference: market shares and entities. You can grow the market share; you can, you know, what you do, you can measure your risk, you can assess it, so you can lead the process. Acquisition is more difficult, more risky, more challenging in the current environment. So in that case, I would say no. We have shareholders; I think they would say no.

Well, the paradox is they know that the environment they have created is such that we should see more consolidation. We should see a reduction of costs because the moment the interest rate curve is flat, we need to be very careful about the cost, to reduce it. So we need restructuring, but it doesn't make it easy; it makes it more difficult. So that's why I've told you that maybe some banks may think about this. That's a different question, but the business case must be assessed case by case in a very careful way by the boards of the bank, and it's not easy.

The ones which are going to win are the ones which have good products for clients, serve well the clients, are very careful about regulation and comply with the various regulations, and are able to reduce costs. One way to address the cost question is to create platforms across the board serving the clients, and of course the IT technology question is coming up front, maybe much more than before. Technology will be key for the future. Clients want it, and cost reduction needs technology. So the capacity to invest, the skills to invest, and how to do it and how to make it efficient will be the driver of success tomorrow.

Well, they are supporting the economy, right? We need to be careful because you have already two sides. This is the cost before the cost, isn't it? Yes. Banks need a well-functioning economy, clients in good shape, operating well. Cost reduction has a lot to do with the capacity of funding of the companies. So monetary policy is designed by the central bank for the economy, not for the banks. But they are positive because simply they have supported growth. Of course, at the same time, they may have a negative impact, but that's the nature of monetary policy to have an impact on the economy, and we have to live with this.

But this is yes, this is a decision by the ECB. I can see that there is a discussion, I see what they do about it, but what is key is the decision and the predictability of the decisions made by the ECB about monetary policy. And once more, the banking industry has to adapt.

But this, once more, this is part of monetary policy. Yep, this is at the core of monetary policy: the vision they have about the way to implement monetary policy according to wage inflation and parameters they have about growth in the economy. And I shall not comment too much on this point because this is a given fact for us. We should be very careful in the banking industry not to influence monetary policy.

Courage. Not easy to manage monetary policy, and you need courage. Capacity to team up because there is a need to grow consensus among decision makers in Europe and within the ECB. And a clear understanding and capacity to provide guidance. What we need the most is to get clear guidance for the future, understand well the vision of monetary policy. And once more, it is based on courage, consensus, and capacity to understand the impact of what is being done.

He has great experience. Okay.

The way we see it is maybe to try to answer your question, need to explain the way we see it. We have a segment of clients, corporate sector, you know, mid-sized companies, large companies. These companies need a lot of banking services, from cash management to advisory M&A services. It's a broad range of skills, all across the world, in various currencies. What we need is to be able to offer this range of services, high quality, fitting their needs. So it's not only investment banking. Once more, we may have different definitions, but it's about corporate banking, it's about investment banking. And when I look at the banks all across the world, the banks which are able to operate across the borders more globally, they offer this type of services. Some started more from corporate banking shifting to investment banking, but I see more investment banking entities shifting to commercial banking. So today, I think there's a change of business model. Serving the clients requires various skills. So it has a lot to do with the definition you give, but corporate banking, investment banking is can reward bankers, you know? Yeah, they can be profitable. It's a good business.