The offices of Banque Oddo near La Madeleine in Paris are a construction site, with almost everything out of place, a symbol of the banking group’s restructuring.
The rooms are filled with the pungent smell of paint, but Philippe Oddo doesn’t mind. Ever since his bank submitted a bid for the Germany’s private BHF bank last year, he has been spending most of his time in Frankfurt.
Mr. Oddo’s battle to acquire BHF finally ended – successfully – this week. Chinese investment conglomerate Fosun, which had launched its own hostile takeover for BHF earlier last year, conceded defeat this week and said it would sell it’s near 30-per-cent stake in the German bank to Oddo. Other major shareholders had already signaled they would sell their own stake to the French bank as well.
That clears the way for Oddo to fulfil its goal: Creating a Franco-German banking power that can play ball with the biggest in Europe.
Philippe Oddo spoke with Handelsblatt about the bank’s acquisition plans.
Handelsblatt: Mr. Oddo, your ambition is to create the first integrated Franco-German financial group with the purchase of BHF Bank. How far along are you?
Mr. Oddo: We have more than 42 percent, and the public bid was submitted on Wednesday and is valid until February 10. On February 17, we will know what share of BHF-KB we own. Stefan Quandt has already said that he will sell his shares, which brings us to 54 percent of shares. Fosun and the members of the supervisory board of BHF Holding have announced that they too will sell their shares. That secures us at least 85 percent.
Beginning at 95 percent, you can buy out the small shareholders. Is that the precondition for integrating BHF Bank?
As far as the squeeze-out goes, that’s correct, but the supervisory board can also make decisions before then. This applies, for example, to our commitment to enter into exclusive negotiations with Société Générale over the sale of Kleinwort Benson Wealth Management. We must take the interests of minority shareholders into account in all the things we do, but they prevent us from taking action.
You intend to assume the position of chief executive officer at BHF Bank.
Yes, but that decision hasn’t been made yet. Reports to that effect within the last week were not exact.
What does Lenny Fischer’s future look like?
He made it clear to us that he would stay for as long as we want him to. He said that he didn’t feel that he had a future in the group in the long term, but that he was willing to help us in the transition period. Things are going very smoothly between us.
What will happen to your own German subsidiaries Meriten and Seydler? Will they remain independent, or will they be part of the group?
We don’t want to jump the gun. The first stage, the convergence of Meriten and Oddo Asset Management, is going very well. Now we want to complete it. Closer cooperation between Seydler and our departments in Paris for stock transactions, fixed income and corporate finance is getting off to a good start, and we want to continue the process. With BHF, we are entering a phase in which we are discovering the bank. We want to get to know its employees and customers very well. And we are taking the necessary amount of time to do that.
After that, we want to design a project for the bank’s future, together with the BHF team, by the end of June. We also want Seydler, Meriten and our teams in Paris to be involved. I see this as a period of reflection. A mature plan should be ready by the end of June.
Many feel that the competition is too intense in Germany and have stayed out as a result. You must have courage to enter the German market now.
I think that the German financial market is truly “overbanked” in some areas. But there are also many strengths, such as the public banks and cooperative banking associations. We are already working very effectively with a large number of savings banks through our asset manager in Düsseldorf, Oddo Meriten Asset Management. I have already been able to meet many directors of savings banks in person, and I am impressed by their work and how successful they are with customers. I will get to know another savings bank this week.
The merger with BHF will make us the most important private bank in the euro zone.
This is new for Germany. Traditionally, banks and savings banks tend to be rivals.
The savings banks have a lot of expertise and strength, and we can complement each other very well and be trusting partners. Our competency lies in the markets, which we know very well. We have tools to understand the financial markets well and utilize them for our customers and partners. We make this expertise available to companies, retail customers and institutional investors. We can find our place in Germany, because we are specialized and we are a family-owned company. The merger with BHF will make us the most important private bank in the euro zone.
But if you provide financing to small and mid-sized companies, you will be competing with the savings banks.
Our approach is to offer different services, which relate more to the markets than the use of our own funds. To put it simply: We can bring together companies and investors. There is truly a market niche here, especially as we have a German-French character.
You have long been interested in Germany. In many cases, people have very personal reasons for liking a country. What about you?
I wasn’t a very good student. One day, my father said to me: “You need to work harder, so I’m sending you to Germany for a few months.” At 14, I was sent to the Collegium Augustinianum, a Catholic boarding school, in Gaesdonck, near Kleve (in northwestern Germany).
Wasn’t it a shock for you?
No, it was a good experience. And thanks to that stay, I chose German as my first foreign language. Later on, I spent six months in Cologne as part of an exchange program between HEC and the University of Cologne. I often say that I did nothing there, but I learned a lot.
Mergers are always tricky, and there are especially stubborn prejudices between Germany and France. How do you intend to deal with them?
In the case of Seydler, we saw that both teams respected each other. The French admire Germany’s economic successes, and in Germany they recognize the financial expertise of the French, especially Oddo’s achievements. Both value the competency of their respective partner, and together we are familiar with 60 percent of the market capitalization in the euro zone. I am personally responsible for Oddo, but also for BHF. Customers see that I am investing my personal fortune, and that I spend three days a week in Frankfurt.
And you speak German.
I have to improve my German, and I want to do it [he says this in German]. We have been treated positively by everyone involved. Now it’s time for us to prove ourselves. We want to belong.
Do you fear a new financial crisis?
No, the banks are very healthy now.
But China or the low price of oil could be the trigger.
Some argue that a few U.S. companies are so heavily invested in shale oil and gas that they are sliding into a disastrous financial situation. But that’s an American phenomenon, unlike the subprime loan crisis, and the amounts are substantially smaller.
There are political risks. Schengen seems to be crumbling, which could jeopardize the E.U. internal market.
I don’t believe that this will be a real economic problem. It will not affect interconnected production within the euro zone. My explanation for the weakness in the markets is this: A few large sovereign wealth funds are being forced to sell assets because their revenues are declining. That’s why all possible industries are affected.