BNP Paribas plans joint venture

Subsidiary to offer portfolio services to HNIs

BNP Paribas has proposed to set up a subsidiary that will provide discretionary portfolio management services in India to cater to the high networth individual (HNIs).

The French financial services group is actively looking at expanding its presence in the country by roping in a domestic partner, as it plans an investment outlay of about $5 million, said Michel Longhini, chief executive officer private banking South East Asia, BNP Paribas.

Sizing up the potential opportunities in new key wealth markets of China, Brazil and India, BNP Paribas is looking at growing its private banking business by 25-30 per cent, thereby doubling its 'relationships' to 500 from the existing 250, said Francois Debiesse, chief executive officer global private banking BNP Paribas. "We are impressed by the growth rate of HNIs in the country, which reflects the potential of this market," he added.

The country today is the second largest market for the French banking group in South East Asia, which also includes the population of non-resident Indians.

India is BNP Paribas' first on-shore centre in the region, largely on account of regulations that did not permit overseas investment. BNP Paribas already has a licence for offering non-discretionary portfolio management services but requires a separate permission from the capital market watch-dog "" the Securities and Exchange Board of India (Sebi) - to manage assets.

"We cannot offer portfolio management services under the banking licence as we are limited to offer only advice to our clients," said Sharad Sharma, head private banking BNP Paribas India.

In early 2000, BNP Paribas withdrew mid-way through its plans to set up a retail presence in India.

Today its keen interest in the country stems from the growing HNI population "" which saw a growth rate of a 22 per cent in 2003 according to a global study "" and the regulatory change that permit residents to invest overseas. According to Merrill Lynch's global report there are around 61,000 HNIs in India.

Apart from offering financial products, BNP Paribas proposes to offer its private banking clientele advice on real estate and art.

The idea is to expand its presence in the fast growing markets of Mumbai, Delhi and Kolkata. BNP Paribas will increase the headcount of its private banking unit by 15 per cent each year, said Longhini. At present, it offers this service with a team of 24 professionals in six cities.