In a recent interview, Lars Machenil, Chief Financial Officer of BNP Paribas, expressed cautious optimism about the economic situation in Europe. He pointed out that growth is accelerating, demand is increasing and the European economy is adapting to a changing environment, with inflation easing and interest rates being cut by the European Central Bank (ECB).
Machenil explained that this positive momentum is fuelling a virtuous circle across Europe, resulting in a growing need for financing, refinancing and risk hedging, services that BNP Paribas provides.
Regarding the volatility seen in June and early July, Machenil said that this was partly linked to the elections in several European countries, as well as uncertainty over the actions of the ECB and the US Federal Reserve (Fed). However, he noted that this uncertainty had begun to dissipate with the ECB's action and the positive trend in certain economic indicators such as the PMI index.
As far as interest rates are concerned, the CFO of BNP Paribas expects two rate cuts before the end of the year, with rates hovering around 3.25%. He pointed out that the bank is comfortable with interest rates in the 2.5% to 3.5% range, and that its forecasts are not strictly dependent on the trend in rates.
Machenil also spoke about BNP Paribas' asset management strategy. Following the sale of Bank of the West, the bank has €7 billion of capital to redeploy. He emphasised that BNP Paribas is looking to make targeted acquisitions that will generate immediate synergies, such as those made with Orange in Spain. He stressed that the bank will take the time needed to find the right acquisition opportunities.
Finally, regarding rumours of a €1.4 trillion asset management joint venture with Axa, Machenil declined to comment, describing the information as ‘wild rumours’ circulating in the market.
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