Degroof Petercam is far from a newcomer to Belgium’s banking scene. Headquartered in Brussels but with offices across Belgium as well as in countries such as France, Luxembourg, Germany, Spain, Switzerland, Italy and the Netherlands, it has been a trusted partner to corporates as well as to private and institutional investors since 1871. Faithful to its mandate to not only protect but also grow the assets of its clients, this family-owned firm evolved through a series of mergers and reorganizations. Today, Degroof Petercam offers a unique portfolio of services in investment banking (corporate finance, financial markets and credits), private banking, institutional asset management, and asset services. The bank is renowned for its dependable partnerships with investors and holds a leading position in mergers and acquisitions and equity capital markets. Enabled by its experienced teams and a network of more than 200 institutional investors across the world, the bank outperforms its competitors in several key areas. The firm’s success is largely based on its humane values and its undergirding commitment to help clients achieve their aspirations, today and tomorrow. Degroof Petercam’s accomplishments have been acknowledged by a number of international awards.
International Banker was pleased to be joined by Mr. Bruno Colmant, CEO of Degroof Petercam, and Mr. François Wohrer, Group Head of Degroof Petercam Investment Banking, to discuss how their dynamic investment bank continues to work closely with its clients to realize their dreams.
Mr. Colmant and Mr. Wohrer, thank you very much for your time today….
Bruno, you became CEO of Degroof Petercam last summer. Has your role as head of Degroof Petercam’s Macro Research division influenced the way you approach your new position as CEO? If so, in what way?
Both as a manager and as a person I’ve been influenced by my former jobs.
My jobs as CEO of ING Luxembourg and of the Brussels Stock Exchange and as deputy CEO of Ageas have given me experience in operational management in different sectors of the financial industry. Being able to bring people around the table and to forge consensus has served me well in my previous role as the head of cabinet of the minister of finance and deputy prime minister. As an academic, I keep searching for different perspectives to look at something. And, finally, as a macro-economist, I always try to bring the past, present and future together. These are just a couple of professional experiences that I think have formed me into the person and manager that I am today.
After joining Degroof Petercam in 2015 as head of Macro Research and as a member of the Executive Committee, I have known and worked with the people who make Degroof Petercam the great financial group that it is. Throughout the years, I’ve also met hundreds of clients. I think I have a good view of what preoccupies our clients and a good understanding of how we, as a bank, can contribute to their futures and their successes.
In your opinion, Bruno, what is the single most important factor that makes a successful banking leader? And what do you consider your greatest strength as a leader?
Everybody will agree that the industry changed a lot over the past decade and will continue to change at an ever-faster pace. As the challenges we face are not one-dimensional, neither should be the solutions. As such, I would say that a willingness to listen and to take into account different views as well as adaptability are key factors for success.
Degroof Petercam was founded almost 150 years ago. Our clients trust us to grow and protect their personal and professional wealth for future generations. So, the overall mission did not change. But the way we do that, the way we interact with our clients, the role we play in society, the expectations our collaborators have from their employer, all of that has changed tremendously. I see it as my role to encourage and motivate people to make sure that Degroof Petercam continues to be relevant to its clients and to create an environment in which our people are able to do so.
What makes Degroof Petercam Investment Banking’s business different compared to that of its competitors, François?
Degroof Petercam Investment Banking combines advisory services and financial markets. We not only advise on debt-capital transactions or equity-capital transactions. Thanks to our own trading room and an extensive network, we can actually also implement what we advise. We fully play our role as a link between investors and companies. Combining advisory services and financial-market services means that we can accompany our clients through the entire process of raising funds, from beginning to end.
The model itself is something you’ll typically find with large universal banks. What is unique is that we are part of an independent, family-owned financial group, which combines both corporate finance and financial markets in a “boutique” niche. There’s a lot in that phrase, but see it like this: being a family company enables us to offer a long-term perspective on top of our integrated services. We don’t have shareholders breathing down our necks and pushing us to inflate the balance sheet when results season is upon us. We are not “product pushers”. And not being a creditor to our clients adds an extra layer of independence. When we advise them to review their financial structures, we can do so being fully independent.
With Europe teetering on the edge of potentially another recession, would you say that Degroof Petercam is adequately prepared for the possibility of another economic downturn, Bruno? How much of an impact do you think a eurozone recession would have on the bank’s income?
Of course, as part of good business practice, we take different scenarios into account. Whether or not there will be a European recession any time soon remains to be seen. In any case, the past months and years have shown us that there are many unpredictable variables. Who would have thought a decade ago that interest rates would turn negative? Or that a US president, by means of a tweet, would have such an impact on the markets? Or that a country leaving the European Union would turn into such a messy process? In its long history, Degroof Petercam has demonstrated that it is very well capable of weathering storms. Without saying that a recession would not impact the bank, I am tempted to say that our diversified business model, the different niches in which we operate, a loyal client base and a careful investment strategy allow us to look at the future with confidence.
François, given the recent underwhelming performance of investment banking and mergers and acquisitions across much of the European banking sector, how has Degroof Petercam Investment Banking managed to survive—and even thrive—in such tough operating conditions?
2018 was an exceptionally good year for Degroof Petercam Investment Banking, and we’ve been able to maintain the same levels of activity throughout 2019. It’s true that geopolitical tensions and macroeconomic uncertainties make companies more hesitant in their projections about the future. But let’s not be blind to the opportunities that the current markets hold.
Operating in a well-defined niche market and being able to offer a varied service offering and wide range of expertise has made it possible for us to help our clients to seize exactly those opportunities.
Bruno, what is the one goal above all others that you hope you will have achieved before the end of your tenure as CEO of Degroof Petercam?
It’s way too early to think about the end of my tenure as CEO of Degroof Petercam! But being the CEO of a company with such a rich history means that you have to take care of the legacy of those who preceded you. Degroof Petercam was founded in 1871 by a family of entrepreneurs. Several other entrepreneurial families have joined since, but the founding family is still on board. Throughout its history, the bank was involved in funding important European railroads, the reconstruction of Belgium after the two world wars and accompanied numerous companies at key moments in their histories. Amongst our clients, we have companies and families who have been with us for generations. This entrepreneurial spirit and focus on long-term relations are embedded in our DNA and should be preserved.
In a way, you could say that my mission at Degroof Petercam is to do what we also do for our clients’ assets: protect and grow for future generations.
In terms of attracting and maintaining a strong client base, François, how important do you think it is that Degroof Petercam’s Investment Banking division strives to offer a full range of services? Do you find that the bank’s diverse range of expertise, such as in asset management and private banking, is a key factor in helping to secure client business?
Many of our clients are clients at more than one Degroof Petercam entity. For example, investment-banking clients who also became private-banking clients, institutional clients who are also clients of both asset management and investment banking, etc. But we also have, of course, corporates coming to us strictly for our investment-banking offers.
In any case, we believe that the best way to build up a long-term relationship with a client is to provide added value to that client. Our offerings both within investment banking and within the Degroof Petercam Group allow us to do that. Consider our offerings to be modular. An entrepreneur looking to further build his business and looking for debt-capital financing will be assisted by a dedicated team. If in time, he wants to open the capital of his company to external shareholders, we’ll help him find the right shareholders. In the transfer from professional to private assets, our colleagues in private banking will accompany our clients in protecting, growing and transmitting their wealth. And because of the wide range of our services in private banking, here, as well, we can really follow and guide our clients through their needs.
Which of Degroof Petercam’s main business segments has performed the best so far this year, Bruno? And what has been the main reason for its superior performance?
At the group level, we combine four métiers, which interconnect to create value for our clients: private banking, investment banking, institutional asset management and asset services. 2019 has proven to be a good year for each of these businesses.
Degroof Petercam Asset Management (DPAM) has delivered an impressive track record over the last four years, and everything indicates that 2019 will be a top year. DPAM’s assets grew by 20 percent this year, both thanks to market effects and important new net inflows, demonstrating the trust our clients, both old and new, put in us.
Our teams in investment banking are advising on many important deals in Belgium, France and abroad and have won several awards this year, such as the International Banker Best Investment Bank Belgium, which we are delighted about.
This year again, our private-banking clients will benefit from solid performances that rank amongst the highest in the market. And also our private-equity offering has offered them profitable diversification possibilities. Asset services is a business that is less visible to most of our clients, but it performs back-office and administration services for investment managers, fund distributors and fund managers. To summarize, the value we create for our clients creates value for our company.
How do you ensure that the bank is consistently hiring and retaining the best investment-banking talent in Belgium and beyond, François?
We’re a growing company and are ambitious for the future, which is in itself appealing. What also sets us apart is that as part of an international, family-owned group, we have 150 years of experience to rely on. That we are family-owned is also an element of stability and allows us to think long-term. And on top of all of that, we’re also what you could call “entrepreneurs for entrepreneurs”, which is a very strong pull factor. When joining Degroof Petercam Investment Banking, you know you won’t be doing a repetitive job, and you won’t get lost in a large structure. Our teams are relatively small, so we need people with a hands-on mentality and who are open to learning a new skillset. We have noticed that that appeals to junior profiles looking for a broad experience but also to more senior profiles who typically have already worked in more rigid structures and are looking to break down a couple of walls and get things done.
Degroof Petercam’s private-banking business has a diverse clientele, ranging from mass-affluent individuals to ultra-high-net-worth families, spanning a broad age range with different preferences. Bruno, what do you consider to be the most important asset that the bank must possess in order to ensure that healthy long-term relationships from such a diverse client base can be cultivated and maintained?
Client proximity. No matter who the client is, as a private bank, you need to know and understand what his or her needs are and have the right solution at hand. And when I say solution, I don’t mean product. Our clients don’t come to us to be convinced that “the fund of the month” is the right one for them. They entrust us with the management of the money they worked hard for and for advice on how they can make sure that that money will also benefit future generations. Since 1871, we have delivered on that promise, and we have everything in place to continue to do so: experienced private bankers and experts; portfolios that deliver excellent returns; proximity to our clients, both in a personal and a digital way; and a business model that allows us to cater to our clients’ needs, no matter how complex.
François, what is your outlook for investment-banking activity in 2020, at Degroof Petercam and, more generally, in the European banking sector?
The factors that make companies more hesitant in their long-term planning are unlikely to disappear overnight. I’m thinking about threats of trade wars, a yet unresolved Brexit and other geopolitical tensions. These will weigh on investor sentiment at least well into 2020. We’ve lived with these in 2019 as well, and deal activity remained strong thanks to international expansion, industry consolidation, succession and private-equity transactions. Financing conditions, characterized by negative interest rates and abundant liquidity in the market, furthermore support company valorization, which remained stable, albeit at high levels. We are taking the uncertainties into account and remaining vigilant, but at the moment, we see no reason for a sudden shock.
It appears that Degroof Petercam is well equipped to handle any uncertainties. Gentlemen, thank you for talking with us today.