BNP Paribas Mulls Consumer Finance Restructuring

BNP Paribas is considering options to restructure its consumer finance department.

The French bank has submitted ideas for a major overhaul of the division to unions, confirming to Reuters Friday (Jan. 6) that “BNP Paribas Personal Finance presented its strategic reflections to the social partners regarding the refocusing of its activities and the adaptation of its operating model.”

In a separate statement reported Friday by Bloomberg, the bank said: “In an evolving consumer finance sector, due to customer usage changes and the economic context, BNP Paribas Personal Finance has presented to its trade unions its strategic considerations regarding the refocusing of its activities and the adaptation of its operational model.”

Personal finance sits within BNP Paribas’ retail banking unit and is especially exposed to macroeconomic headwinds affecting consumers’ ability to borrow and spend.

As PYMNTS has reported, both business and consumer lending has slowed dramatically in the eurozone. After climbing to historic highs in the fall, in November, bank lending to businesses and consumers dipped, marking the beginning of what analysts predict will be a prolonged period of declining loan growth in Europe.

In periods of economic stress, the risk of consumers defaulting on loans rises, impacting banks’ bottom lines.

To mitigate against an anticipated increase in bad debt, banks in the U.K. have bolstered their loan-loss reserves — the capital buffer that they put in place to protect against loan defaults.

As Bloomberg reported on Friday, BNP Paribas is attempting to lower its consumer finance unit’s exposure to risk by moving away from riskier personal loans and credit cards to focus more on auto loans.

In any restructuring, the bank could potentially run down its loan book or sell off parts of the business.

Already, BNP Paribas Personal Finance has agreed to sell its Bulgarian business to Postbank, the Bulgarian division of Eurobank and the fourth-largest bank in Bulgaria in terms of loans and deposits.

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