French banks BNP Paribas and Natixis are to focus investment-banking activity on a select list of large clients to help preserve capital and cut debt amid the euro zone debt crisis, according to memos obtained by Reuters.
The moves are a fresh indication that pressure on European banks to boost capital buffers and secure funding lines is threatening to overturn years of relationship-building as lenders fight for survival.
BNp, France's biggest listed bank, said in a document sent to employee representatives it was refocusing on key strategic clients and looking to cut its dollar net asset base by half at its structured-finance division, partly via asset sales.
Our cuts in risk-weighted assets force our client coverage teams, in each zone and each country, to redefine the priority lists of preferred clients, it said. This selection takes into account the currency of the client's financing, the client's past and future profitability and cross-selling opportunities.
Smaller rival Natixis, meanwhile, is to exit non-core activities and create a Global Transaction Banking unit offering cash management and trade finance, targeting 200 million euros ($255 million) revenue by 2015-16, according to a written presentation given to employee representatives on January 13.
Neither BNP nor Natixis was available to comment.
Natixis, majority owned by cooperative banking group BPCE, aims to cut risk-weighted assets by 5 percent this year, the document said. The bank is also studying expressions of interest received for its commodities unit, it said.
(Natixis plans) closure of non-strategic financing activities ... However, commodity financing, leveraged buyout funding and property finance will continue to be pursued, it said.
Both BNP and Natixis are cutting back dollar activities and shrinking their investment banks following an unprecedented funding crunch in the U.S. currency that shook French banks hard last summer and precipitated a fall in share prices.
Businesses like aircraft and shipping finance, which are priced in dollars, are in the firing line.
On shipping, Natixis's presentation said it would run off its portfolio of assets not linked to oil platforms and close its team in Dubai. The bank is also reducing its aircraft business to focus on the main international airlines.
BNP, meanwhile, is to cut lending in any currency other than the euro for the next 15 months, according to its memo.
It also said it expected to have to find an extra capital cushion equivalent to 2 percent of risk-weighted assets due to its size and status as a systemically important bank.
This plan's direct impact ... is the sale of existing assets and the cut in lending in currencies other than the euro for the next 15 months, it said.
Rival Societe Generale is also exiting or cutting some businesses because of funding difficulties, according to a 245-page memo first revealed by Reuters.