November 20, 2017 / 4:25 PM / a year ago

Natixis seeks to cement CIB growth

LONDON, Nov 20 (IFR) - Natixis set out a modest set of targets for its corporate and investment bank for the next three years, cementing the strategic changes it has carried out since 2013.

That has seen the French bank diversify beyond its domestic market and improve its CIB’s return on equity by 5.3 percentage points to 13%.

Chief executive Laurent Mignon said starting from a lower base had made it easier for the bank to gain market share but said it could be improved further.

“We still think we have room to improve market share but we don’t want to push the number too high and increase the level of risk,” he told analysts in London.

The lender now wants to focus on four sectors – energy and natural resources, aviation, infrastructure and real estate, and hospitality – and improve RoE by a further percentage point.

The four sectors generated investment banking fees of US$25bn in 2016, the bank said citing Thomson Reuters figures.

The CIB has increased revenues from the Americas by 13% on average annually over the last four years and revenues from Asia-Pacific by 27% annually over the same period.

These two regions account for 38% of revenues as opposed to 25% in 2013.

Part of this has come from the acquisition of advisory businesses, such as Leonardo and PJ Solomon in the US. Natixis said it wanted to continue this policy of selective acquisitions to create a “multi-boutique” model.

Over the next three years Natixis also wants to increase CIB revenues by 3% on average annually.

It aims to increase revenues from the M&A and investment banking businesses, as opposed to the markets side, by 7% annually. Over the past four years they have grown by 18% annually.

Within markets, the bank wants to focus on equity derivatives and structured finance.

CIB co-head Francois Riahi expressed confidence that the growth could continue despite competitive pressures, especially from the major US banks.

“It’s clear the US banks’ share of the market has increased in Europe but we have also increased our market shares in the past few years,” he said. “It’s compatible that we can continue to gain market share.”

He said the impact of MiFID II had been incorporated into the plans but he did not expect the reforms that take effect in January to affect the business greatly.

“The impact will not be very significant for us,” he said.

Bruce Hamilton, analyst at Morgan Stanley, dubbed the new plan “evolution rather than revolution” and said it was not radically different from the current model.

Natixis shares fell €0.11, or 1.75%, to €6.42. (Reporting by Christopher Spink)

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