France's Banque Paribas will stick to specialized banking operations in the United States and not copy its big European rivals who are expanding across the board, according to Andre Levy-Lang, the bank's chairman.
"Can we compete in what appears to be a game of giants?" Mr. Levy-Lang asked, during a recent New York briefing. "Our choice is to concentrate on where we have a strong position."
As part of a drive to strengthen U.S. operations, Paribas will boost its staff here from around 780 to 1,000 by yearend, hiring a range of capital- market and other specialists and back-office staff.
The bank is not actively pursuing acquisitions because it believes prices are too high, Mr. Levy-Lang said. He did not rule out smaller acquisitions in specific areas, such as asset management.
Paribas' decision to remain a specialized provider of a limited array of services comes amid a rapid buildup among other big European banks. Deutsche Bank, Societe Generale, Swiss Bank Corp., and HSBC Holdings PLC have all been paying top dollar to hire financial specialists in a bid to become world-class banks with a broad array of operations.
Currently, Banque Paribas is allowed to conduct both commercial and investment banking operations in the United States under the International Banking Act of 1978.
Executives said that the five areas Paribas has chosen to specialize in are: distribution of European and emerging-market debt and equity to between 100 and 150 U.S. fund mangers; foreign exchange trading; specialized finance and senior debt for growing, medium-size, non- investment-grade U.S. companies; project finance and commodities finance.
Alain Louvel, chief executive officer for Paribas in North America, noted that Paribas is one of the largest foreign banks underwriting high- yield loans for midsize U.S. companies. Such loans are typically extended to non-investment-grade companies at a spread of 250 basis points or more above the London Interbank Offered Rate. The bank arranged $2.2 billion worth of such loans last year in 23 transactions.
Other big foreign bank players in this market are Canadian Imperial Bank of Commerce, Toronto Dominion Bank, Bank of Nova Scotia, and Credit Suisse First Boston.