[PARIS] BNP Paribas chief executive officer Jean-Laurent Bonnafe plans to cut hundreds of domestic retail branches in an effort to lift profitability at a business that has struggled for years.
In a first step, the French lender plans to close around 80 branches this year and another 120 next, according to people familiar with the matter. Headcount in the branch network is expected to decline by 5 per cent a year, while staff would be added in online and phone banking.
Negotiations with labour unions, which were first informed of the strategy for the business in March, are set to continue in the coming days, the people said, asking not to be identified because the information is private. Affected employees will be offered new roles, and BNP Paribas is also counting on natural attrition to avoid layoffs, according to the people.
“We presented in March an ambitious growth plan to trade unions that outlines a strategic roadmap and related investments for our Commercial & Personal Banking in France,” a spokesperson for BNP Paribas said in an emailed statement. “Every employee of the bank has their place in this project.”
Fixing the unit is a key focus for Bonnafe, after he built up the trading business and propelled the asset management arm into the top ranks with the takeover of Axa’s investment arm agreed last year. BNP Paribas last year named Isabelle Loc to run the business, which has struggled as local regulations, costly interest rate hedges and the European Central Bank’s decision to no longer remunerate mandatory reserves weighed on earnings.
The unit is now “at a pivotal point,” chief financial officer Lars Machenil said in an interview in February. The “headwinds are basically behind us.”
Loc took over the business after its former head, Marguerite Berard, left BNP Paribas last year and went on to run Dutch lender ABN Amro Bank. She is counting on the digital unit Hello bank! as well as its private banking assets in France to grow the business.
BNP currently has around 1,500 branches in France. Under Loc’s plan, some of the business in the branches will be transferred to remote customers centres, where employees will be offered new jobs, the people said. Others may be offered positions in areas such as private banking, they said.
BNP said previously that it will unveil its plan for the business at the end of June. French newspaper Les Echos has reported that about 500 branches may be cut in total by 2030. BLOOMBERG
