- More of Oddo's staff will be based in Germany than France
- Oddo wants to `bring something new' to the German market
Oddo & Cie., the French family-controlled bank with businesses from wealth management to metal trading, says it’s figured out how to compete in Germany with savings and co-operative banks: Buddy up with them.
“We’re focusing on Germany” for growth, Managing Partner Philippe Oddo said in an interview in Paris. “Our idea is not to compete with the Sparkassen and Volksbanken, but rather to work together on a complementary basis.”
French banks, battling a stagnant domestic economy, are increasingly looking to Germany to boost their revenue. Oddo plans to almost double its assets under management by acquiring the German unit of Brussels-based BHF Kleinwort Benson Group, part of a 760 million-euro ($860 million) deal. Societe Generale SA and BNP Paribas SA, France’s biggest banks, have long-standing plans to increase corporate and investment-banking revenue in the neighboring country.
Oddo plans to offer German financial institutions a range of services, including asset management, trade bookkeeping and the distribution of bond and other securities to investors outside Germany. With BHF, Oddo wants “to bring new expertise, something new on the market” for German corporate clients, he said.
The company beat competition from Chinese billionaire Guo Guangchang’s Fosun International Ltd. to acquire BHF Kleinwort Benson. Fosun withdrew its bid on Dec. 18, about a week after the company’s shares were suspended in Hong Kong following a report in Caixin magazine that he had gone missing. Guo returned after aiding authorities with an investigation, according to people familiar with the matter.
The French company’s offer is expected to be accepted by at least 90 percent of shareholders, Philippe Oddo said. If Oddo gains acceptances for 95 percent or more of the stock, it may try to squeeze out the remaining shareholders, he said. The tender on BHF Kleinwort Benson shares runs until Wednesday and the results will be published next week.
Oddo is making its third acquisition in Germany since the start of 2015 and will soon have about 1,400 employees in that country, more than its French workforce of over 1,000 people. The company bought a Dusseldorf-based money manager from Bank of New York Mellon Corp. last year and completed the purchase of Close Brothers Group Plc’s German securities unit, which specializes in equity and debt-market services for mid-sized companies.
The company’s not on the lookout for further acquisitions, Oddo said.
The Paris-based bank will focus on research, investment-banking and asset-management services in Germany rather than lending, Oddo said. That’s because state-controlled lenders and local saving banks still dominate deposit-taking and corporate finance to mid-sized industrial firms known as the Mittelstand, which help make Germany Europe’s biggest exporter.
“Germany is a hard market to crack across the board,” said Scott Bugie, a former managing director of financial-institution ratings at Standard & Poor’s in Paris who now works as an independent consultant. “It is not a very profitable market; cooperative and savings banks are very tough competitors, often able to get cheaper funding and intertwined with local governments and corporations.”
Oddo raised 100 million euros at the end of last year to fund the BHF acquisition from investors including the Bettencourt-Meyers family, L’Oreal SA’s biggest shareholder. It also agreed to sell BHF Kleinwort Benson’s U.K. private bank to Societe Generale.
The deal will increase Oddo’s assets under management to more than 100 billion euros.