Natixis has launched a new business organisation as it continues to implement its 'New Frontier' strategic plan announced by the bank's CEO Laurent Mignon (pictured) at the end of 2013 to 'accentuate the development and internationalisation' of the bank and achieve 'business model optimisation'.
Under the new businesses organization the bank's Investment Solutions division will be split into two new business units including Insurance and Asset & Wealth Management which includes private equity.
Within Corporate and Investment Banking (CIB), Global Finance and Investment Banking are now two separate business lines and the bank has also created a Global Securities & Financing (GSF), a joint-venture between financial institutions coverage (FIC) and equity derivatives. The joint-venture includes Securities Financing Group (SFG, previously in FIC) and Equity Finance (previously in Equity). Revenues of GSF will be equally split between Equity & FIC.
Within Specialised Financial Services (SFS), Payments division is split out of Financial Services, and set up as a separate business line. This includes the removal of the Financial Investments division and its inclusion within the Corporate Center.
As a result of these changes the bank will increase capital allocation to its business lines from 10% to 10.5% of the average Basel 3 risk weighted assets; and introduce a reduction in normative capital remuneration rate to 2% (compared to 3% previously). The bank said the changes affect business lines net revenues, expenses, intermediate aggregates and capital allocation, but 'overall these adjustments have no impact at Natixis level'.
The new organisation was announced on the bank's Q3 2017 report which showed a 10% year-on-year increase in net revenues for core businesses, to €2.068bn, partly driven by a positive momentum in the Investment Solutions business which experienced a 17% y-o-y increase in revenues fuelled by solid activity levels and improved product-mix in both Asset Management (net revenues +18% year-on-year to €716m) and Insurance (net revenues +12% y-o-y to €174m).
On a year-on-year basis, net revenues from Investment Solutions progressed 17% in 3Q17 and 12% in 9M17 to reach €940m and €2.7bn respectively. Over the same periods, operating expenses increased by 11% and 8% respectively. Gross operating income improved 29% year-on-year in 3Q17 and 21% in 9M17.
Asset Management recorded €3bn of net inflows in the third quarter, with €5bn inflows on high value-added long-term products outweighing €2bn outflows on money-market products. Assets under management reached €813bn at end-September, including the transfer out of €23bn of CNP Assurances assets during the quarter. In Insurance, overall turnover (excluding reinsurance agreement with CNP) progressed 31% YoY to €2.5bn, driven by a sound momentum in all segments.
The French bank also reported that net revenues from Corporate & Investment Banking rose 4% YoY despite lower client activity in capital markets relative to 3Q16 which benefited from the high volatility sparked by the Brexit vote at the end of June 2016. Investment Banking and M&A also fared well, with revenues expanding 13% year-on-year, according to the bank which also reported that Specialized Financial Services grew net revenues 5% to €341m, with Specialized Financing rising 6% and Financial Services 3%.
Natixis is the fifth most active bond provider for retail structured products in Europe with a 6% market share across €3.7bn in sales, according to SRP data.
Natixis has marketed 84 structured products in its domestic market France during the third quarter of 2017, an increase of 61.4% from the 51 products launched in the previous quarter. During the quarter, the French bank entered into an exclusive licensing agreement with Nasdaq to develop the Nasdaq-100 Target 25 Excess Return Index, and launched the Green & Sustainable Hub within its CIB division.
Natixis also appointed Eric Arnould as global head of equity capital markets within the bank's corporate & investment banking (CIB) division, at the end of July.
'During the course of the plan, we have achieved our goal of becoming an exclusively client-focused bank that delivers high value-added and non-capital intensive solutions,' said Mignon. 'We have expanded our international footprint in asset management and Corporate & Investment Banking, set up a single insurance arm to serve Groupe BPCE and its two large networks, and continued to develop synergies with them in terms of services and specialized financings.'
Click in the link to read the full Natixis Q3 2017 report.
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