Mumbai: French bank BNP Paribas has decided to shut its domestic unit that caters to the country’s rich investors. High costs, growing losses and shrinking margins may have prompted BNP to close its domestic wealth unit after two decades of existence in the country, said people familiar with the matter. BNP Paribas Wealth Management, the largest foreign wealth manager in India, handled client money worth $14.72 billion (about Rs 1.1 lakh crore) as of December 2019.
The lender has asked majority of the 60 executives, who were part of the wealth management business, to leave, said two people in the know.
In response to an email query, a BNP spokesperson confirmed the move to wind up the business.
“This decision has no impact on our continued wealth management growth strategy in Asia, which remains an important growth engine for our global franchise. We will accompany clients through every step of the transition,” the BNP spokesperson said.
BNP said that it will continue to focus on growth of its corporate and institutional banking franchise in India. The bank also owns retail brokerage Sharekhan.
The move to shut BNP Paribas Wealth Management India has come as a surprise as it was hiring even in early 2020. Ravinder Singh was appointed CEO and MD a year ago.
BNP joins the list of large wealth management firms that have exited India in the past decade. In 2019, IIFL Wealth decided to acquire L&T Finance’s wealth management business.
In 2015, RBS sold domestic wealth management business to its India private banking head Shiv Gupta. Same year, DSP Merrill Lynch sold its wealth management business to Swiss banking group Julius Baer.
“For foreign firms, running a wealth or asset management business in India is not viable or tough because of high cost, low margin and stiff competition from the local firms,” said Sunil Singhania, founder, Abakkus Asset Management.
Source: ET Markets