Lecomte on sailing, sustainability and digital disruption

Private bankers are a breed apart. A conversation with an investment banker tends to be transaction based. They want to know what you know about a deal and in turn tell you what great IPO or merger they’re sweating over. With senior wealth managers the reverse is often true.

Interviews in this instance sprawl – but happily so. You get to inspect the grass verges rather than the road ahead; to take time to smell the roses.

So it was when Euromoney sat down to talk to Vincent Lecomte, a 30-year veteran of France’s global lender, who has been chief executive of BNP Paribas Wealth Management for more than a decade. Over the course of two Zoom calls, we covered sustainability, sailing, his love of everything digital and plenty more.

But we started on a more prosaic note. The wealth and asset management arm of the French banking firm posted a 14.7% year-on-year rise in revenues in the full year 2021, to €3.42 billion, with pre-tax income up 63.1% on an annualized basis to €951 million. The sector generated global net asset inflows of €7.7 billion last year.

Much of the growth was due to a sharp rise in fee income and increased loan activity, plus strong net asset inflows across asset management and real-estate services, particularly in the US, France and Germany.

“Last year was our best ever in terms of the net new assets we raised from big family offices, families and so forth,” explains Lecomte.

He has missed travel during coronavirus, although that is changing. As Covid moves from pandemic to endemic, Lecomte has begun to move around Western Europe, visiting staff and clients in the likes of the UK, Germany, France and the Benelux countries.

He hasn’t flown intercontinental since the start of 2020. No long-haul flights to New York, São Paulo, Singapore or Hong Kong. But that hasn’t stopped the bank picking up new business in those places and consolidating existing relationships. Private banking assets under management (AuM) at US subsidiary Bank of the West stood at $19.5 billion at the end of 2021, up 16.3% year on year.

Lecomte points to the strides the bank continues to make in Asia, where it has well-established private-wealth centres in Hong Kong, Singapore and Taipei, as well as a thriving China franchise serving clients on and offshore.

In all those markets, he says, the bank is “connected, via the first generation, to generations two and three.” That’s how you build a strong and long-lasting private banking business: it’s not just about securing the trust of first-generation entrepreneurs, but their children and grandchildren too.

Then there’s Europe. Lecomte describes it as BNPP’s “home region” – EMEA accounts for 70% of total AuM in private banking.

A year ago, the bank set out plans to integrate two key internal groups: wealth management and corporate and investment banking (CIB). The aim, says Lecomte, was to give clients access to a more holistic range of world-class private banking, corporate finance and real estate services at a time of global crisis.

“If you speak to our colleagues from CIB, they’ll tell you we have gained massive market share in Europe due to the commitment we made to support entrepreneurs in these tough moments,” he adds.

France is at the heart of BNPP’s regional strategy. But it is also a powerhouse in private banking in countries such as Germany, the UK, Italy (via its local brand BNL) and Belgium (through another subsidiary, BNP Paribas Fortis).

Lecomte points to a longstanding presence in real estate, a key product for European and non-European high net-worth families keen to invest in prime residential property. He says BNP Paribas is number one for commercial and residential real-estate services and advisory asset and property management in Germany and France, and top five in the UK.

Covid, he adds, offered the bank a chance to remind clients of its deep pockets.

“The fact that at a time of crisis we can offer our clients credit, thanks to our strong balance sheet, made us stand apart from many of our competitors. Some did not provide the kind of support clients expected, and that enabled us to gain market share in Europe.”

In the first two years of the Covid era, the Paris lender hired around 50 new wealth managers across its entrepreneurs and families group. The aim is to deliver a full range of corporate banking services – including cash payments and credit – plus personalized wealth management services to entrepreneurs and large families, a segment that accounts for 40% of AuM.

The focus is on three markets: the Netherlands, Italy and, in particular, Germany, where a key generation of mid-sized Mittelstand company owners are preparing to either sell the company they built or place it in the hands of the next generation.

Lecomte’s mind really begins to whirr when talk turns to life beyond the bank – and to the new ideas and services his team is continually cooking up to differentiate the bank from its global peers.

He’s a keen outdoorsman and, in particular, has a love of the sea.

“I love sailing, particularly when it’s rough and even if the weather conditions are not so sunny – for example, in Brittany where the seas can be rough.”

He pauses and adds: “Maybe that’s quite similar to what we are experiencing now.”

When it comes to technology, bankers often like to talk about its ability to foment disruption and generate profit – even if many seem not entirely to trust or understand it.

But Lecomte is happy to discuss digital’s impact on private banking and seems neither out of his depth nor a zealot. Perhaps this is because wealth management, unlike some areas of the financial world, has not been invasively disrupted by new ideas at dizzying speed.

There are some good wealth-tech firms out there, but none have come close to beating the big private banks in delivery of private wealth services.

When faced with disruptive young firms doing something they can’t, many banks have simply chosen to open their cheque book. Look at JPMorgan’s acquisition of UK robo-advisory firm Nutmeg in June 2021 and UBS’s purchase of Wealthfront, an automated wealth manager with more than $27 billion in AuM and 470,000 clients, for $1.4 billion cash in January.

In terms of general wealth management, BNP Paribas has no plans to target external acquisitions.

“Our policy is to focus on organic growth," says Lecomte, "because we believe that is the best way to create value for our clients, for our people and for the bank as a whole. We believe we still have untapped potential internally.”

But it is a different story on the digital side. With Gambit Financial Solutions, a fintech it bought in 2017, BNPP Wealth Management has developed MyMand@te, a digital platform that lets clients create their own portfolios and wealth profiles in collaboration with a relationship manager (RM).

It has also joined forces with PaxFamilia, another Belgium-based fintech, to roll out a full-service digital wealth platform called Digital Family Office. This gives clients an overview of their portfolio that they can share with family members and others, such as the board of a family trust or foundation.

“Continuing to invest in digital is of paramount importance,” says Lecomte, pointing to its place at the heart of 2025 GTS, a nine-year plan to redesign the client journey by leveraging internal digital resources and the expertise of seasoned RMs. “We know we cannot do everything. And we believe it’s even better not to do everything and instead to leverage these kinds of technologies via fintechs in which we have invested.”

GTS stands for growth, technology and sustainability, and it aims to help clients benefit from the transition to a more digital and sustainable global economy, while putting staff at the heart of the process.

Another key aim is to continue to attract, train and retain wealth managers.

Euromoney has written about the global fight for private-banking talent before and it’s as fierce as ever.

“To achieve [our] goals, it is essential to engage employees, develop employee training and experience, and be attractive,” Lecomte says.

Like all banks, he admits BNP Paribas has “significant” human resource challenges. But its size, global reach and dedicated investment in digital and environmental, social and governance (ESG) issues, give it a source of strength he believes it can capitalize on. BNP Paribas Wealth Management hired 1,000 new employees in 2021 – demonstrating, he notes, “our ability to attract talent to this stimulating sector.”

He sees technology as a positive and affirming force.

“It is one of my favourite topics, as I’m a strong believer. Digital is clearly an enabler to facilitate access to data for, say, family offices who want to better leverage the data we have for their own needs. We have a clear game plan to further digitalize our offering. We want to enhance our leadership in Europe in financial wealth management. It’s a priority.”

The pandemic has further accelerated that process. He reckons 60% of clients are now digitally active – meaning they connect to the bank directly via their wealth management app at least once a month, whether to speak to an RM, read reports or view presentations.

“We saw during the Covid crisis an increased usage of all kinds of digital tools and services by our clients. Many were reluctant at first – and I’m not talking about super-affluents or the high net-worth, I’m talking about the ultra-high or family offices. But there has been a real shift and they really want to use digital capabilities now. The lesson is that you cannot afford not to invest in digital.”

The other big focal point for the bank’s wealth managers is everything relating to ESG.

In the bank’s latest Global Entrepreneur & Family report, published November 2021, it found that 63% more entrepreneurs were willing to consider sustainable investments than was the case a year earlier. It also showed that 58% of entrepreneurs held some form of sustainable asset in their portfolios, up by a quarter in two years. That number peaked at 69% among self-made clients with more than $25 million in investable assets.

Asia is the standout story. There the take up of sustainable investments among wealthy clients jumped to 69% in 2021, from 39% in 2019.

“I remember some years ago this was a theme – but it was not that easy to convince entrepreneurs to invest in such products,” says Lecomte.

How fast things change.

He adds that the bank’s number-one priority is to offer “a seamless journey, fully integrating ESG at every step of the client experience.”

He points to a continual process of educating RMs about sustainability – new rules, models, norms, data and thinking – at its internal Wealth Management University, first unveiled in 2017.

BNP Paribas Wealth Management has long been a trailblazer in ESG. It created a digital tool called myImpact that shows clients their impact on the environment and society. Based on the United Nations’ 17 Sustainable Development Goals, it seeks to nudge them into assembling cleaner and greener portfolios.

The bank also chose to codify its own ESG rules, creating a Clover Rating system to measure the impact of all asset classes. Lecomte reckons 80% of the bank’s recommended universe of investments have an impact rating, ranging from zero on the Clover scale (signifying “poor integration of sustainability concerns and/or high ESG controversy”) to 10 (“significant integration of sustainability”).

His aim is to raise that to 100% by the end of the year, noting: “It’s a huge advantage for our clients as we can really facilitate their ESG investment choices.”