Royal Bank of Scotland Group Plc will refer thousands of its biggest customers to BNP Paribas SA for cash management and trade finance as the U.K. lender retreats from commercial banking worldwide.
The bank is contacting all customers that will need to move their business, the Edinburgh-based bank said in a statement Thursday. There is a “streamlined process” for companies to move to BNP under the referral agreement, or they can choose to move to other banks. Neither bank would comment if there were any fees associated with the deal.
RBS Chief Executive Officer Ross McEwan, 57, is focusing on U.K. consumer and commercial banking and shrinking the investment bank to restore profit as the government prepares to sell its stake after a 45.5 billion-pound ($71 billion) bailout. The cash management operation, which is part of the securities division, isn’t considered “essential” because it doesn’t meet the lender’s profitability targets, according to the CEO.
“In BNP Paribas, we have found a bank that has the commitment to work with our GTS customers,” said Marc Townsend, head of global transaction services. “It has the people, country coverage, strong global product capability and infrastructure in transaction services to be an attractive alternative for our affected customers.”
RBS rose 0.5 percent to 364.6 pence at 12:06 p.m. in London, paring its decline this year to 7.6 percent, still the worst performance among British banks. BNP Paribas was little changed at 55.35 euros in Paris.
“BNP Paribas’s ambition is to broaden and consolidate its leadership and to carry on offering its clients seamless European and international banking services,” Jean-Laurent Bonnafe, CEO of the French lender, said in an e-mail. “This agreement is a perfect fit for our ambitions.”
As RBS exits the transaction services business outside the U.K. and Ireland, Royal Dutch Shell Plc, the world’s second-biggest oil company by sales, is among clients that have sought to find other providers, people familiar with the matter said last month.
Financial firms including BNP Paribas, Barclays Plc, Deutsche Bank AG, JPMorgan Chase & Co. and Australia & New Zealand Banking Group Ltd. are among lenders that have been trying to lure customers RBS will no longer be able to serve, people with knowledge of the moves have said.
Deutsche Bank is expanding its operations in the area, with new CEO John Cryan saying it has a “first-rate international businesses in transaction banking, which will be the continued focus of investment,” in a letter to employees on Wednesday, his first day in charge.
HSBC Holdings Plc was voted the best international cash manager in 2014 by company treasurers, according to the most recent survey by Euromoney. Europe’s largest bank has held the top spot for the past three years, followed by Citigroup Inc., Deutsche Bank and Bank of America Corp. BNP Paribas was ranked fifth for services to non-financial institutions, while RBS came sixth.
The nuts-and-bolts business of providing clients with checking accounts, overdraft facilities and managing their transactions gives lenders the chance to sell corporate customers more lucrative products such as derivatives. Global companies rarely change their cash-management provider because of the complexity and depth of the connections they establish with their bank. RBS’s GTS division served 7,000 companies at its peak, the bank said.
“Cash management and trade finance are vital services to facilitate the everyday business of corporate clients,” Alain Papiasse, a deputy chief operating officer of BNP Paribas, said in an e-mail. “Being a solution provider to our corporate clients for their needs in Europe and internationally” is “at the heart of BNP Paribas’s business model.”