Commerzbank custodial sale provides German conduit for BNP Paribas
Commerzbank’s desperate race to dump all unnecessary ballast overboard has provided France’s BNP Paribas Securities Services with an entry into Germany’s open-ended real estate funds market, and an opportunity to expand its own mutual fund business here.
For an undisclosed sum, although rumoured in Frankfurt circles to be about €200m, BNP Paribas is taking over the Depotbank (custodial bank) for the partly-nationalised Commerzbank’s €13bn of open-ended real estate interests, and transactional services on a total of €93bn of depositary assets such as German-domiciled funds and institutional vehicles. The deal had been expected in Frankfurt for some time.
The move allows the French group become the third-largest real estate custodial bank in Germany for both open-ended funds and institutional funds, and helps it to put some distance between itself and nearest competitor State Street in the sector. BNP Paribas with €190bn was just slightly ahead of its US competitor (€177bn) before adding the Commerzbank’s €93bn to its assets under management, along with the assurance from fund manager Allianz Global Investors of the extension of its service contract.
The Depotbank has 80 employees, who are being given the option of moving to BNP Paribas. Commerzbank itself is in the process of shedding up to 5,200 jobs, as the bank refocuses on private clients and ‘Mittelstand’ companies.
According to Commerzbank board member Frank Annuscheit, “The sale comes about as part of our ongoing examination of the bank’s strategic direction. Custodial bank services for funds are no longer part of our core competency.”
BNP Paribas’ head of Germany Gerald Notsch commented, “The deal will help us to increase our market dominance in the institutional securities funds area and gain a significant presence in the UCITS business – an area that, to date, has been under development and, in the case of real estate, non-existent. Both will be strengthened by the acquisition. The retail funds in liquidation are not part of the transaction.”