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Following is the full transcript of CNBC's exclusive interview with Jean Lemierre, Chairman of BNP Paribas. This interview broadcasted in Asia on Friday, 15 September at the 2017 Singapore Summit.
All references must be sourced to a "CNBC Interview".
Interviewed by Nancy Hungerford, Anchor/Correspondent, CNBC.
Nancy Hungerford (NH): Let me bring in our next guest, that is Mr Jean Lemierre, the BNP Paribas Chairman. And Jean, thank you for taking the time to speak to CNBC here at the Singapore Summit. A lot of discussion today about increased provocations coming from North Korea. What is your assessment of the market reaction, given what we're seeing today is relatively muted?
Jean Lemierre: Of course, the situation is worrisome – the tensions. But market participants 'till now are quiet. I think they understand the situation, they are confident. We are confident that leadership in many countries will manage the situation and avoid a crisis. And hopefully it will remain like this.
NH: And it does beg the question of what will it take for volatility to have a sustained uptick. I know the banks are watching volatility very closely as trading revenue remains subdued. What ultimately will it take and how much of a concern this is, when you look at trading revenue at BNP Paribas?
Jean Lemierre: You speak about volatility but we should also speak about growth. Growth is quite good in the world. Growth is back in Europe, it's good in the U.S. and in Asia. Yes, volatility is very low. Here and there you have some elements of volatility but I do not believe that volatility will become higher in the near future. Monetary policy are still accommodative in Japan, this is clear, and in Europe and in the U.S. There are some signals of a change but they will be slow and have an impact in the medium term. We need to be ready for this but it will not happen too quickly.
NH: That's right, ECB President Mario Draghi has said any tightening will be very gradual. And you mentioned it's still quite accommodative. But is it too accommodative? Because just last year you told us we had to be somewhat cautious with negative interest rates. Has it hit the point where they're more detrimental than beneficial to your bank?
Jean Lemierre: Well, it is beneficial to the economy. Inflation, core inflation is still low, even if it is increasing. The ECB supports a lot the activity in Europe. The Euro is strong by the way. So hopefully we should slowly see slowly what he said - a change. But you know, monetary policy is not to be designed for banks but for the economy. So we deal with it. BNP Paribas, we know how to deal with this. We have a very good, business model. Integrated, diversified. We know how to serve the economy and cope with this type of situation. I shall not complain.
NH: Shareholders have rewarded you for some of the diversification as well – outperforming some of your peers. But let's go more into that point you made about growth, because banks are highly dependent on growth. There was a lot of optimism surround Emmanuel Macron's election, that he would be able to really jumpstart that growth, particularly in France. Perhaps that has benefits for Europe as a whole. But now his popularity is fading, he's facing some resistance to key reforms he wants to put through. Does that concern you?
Jean Lemierre: Well, I can understand (why) you look the glass always… the half which is empty. But let's look at the other half. At the beginning of the year, the situation, the assessment was not this one. At the beginning of the year, everyone had told me the Euro will disappear, France will go apart, populism is coming. This is not the case. Elections have given clear results in the Netherlands, clear results in France and they will give in Germany in a few days. So people are committed, they are committed to the Euro. In France, Macron has a strong majority. A new President has been elected. Not only himself but the parliament he has behind him. President Macron has the capacity to implement reforms. We see the beginning of this: labor reform, tax reform, budget reform, its moving forward. I hope that very soon, we shall see a new tone in the cooperation between France and Germany. And the leadership of the two countries for the European Union is absolutely crucial.
NH: So you're confident that ultimately labor reforms will get passed?
Jean Lemierre: Yes. It is needed and I do believe there is wide support and it will be implemented.
NH: And we don't always look at the glass half empty here. So let's talk about some positives surround Brexit. There's been some suggestions that this could be a positive for Paris, for the French banking industry. Overall, is that how you see it?
Jean Lemierre: First, Brexit is a question for the U.K. Of course, they have to make decisions, they have to make views about they want to negotiate and they want to prepare for the future. That's the key part of the story. Now, if negotiations are such that there will be new allocation of resources across the continent, it will go to various places. It will go to Frankfurt, to Amsterdam, to Dublin and of course, to Paris. And Paris is well placed.
NH: The Deutsche Bank CEO said the other day though, "Forget Paris. In Europe, the only opportunity here is really for Frankfurt". How do you respond to that?
Jean Lemierre: I respond a different way. We do believe in the Eurozone. Investors will make decisions. We are in Paris. We are strong in Paris, we believe in Paris and we invest in Paris. But the winner will be the Eurozone.
NH: But would you like to see some sort of continuation of a single market-like situation so that banks will have easy transition outside of Brexit?
Jean Lemierre: There's probably a need for transition but once more, this is a decision for negotiators, for leaders in the EU and in the U.K. negotiations have been open, they're not finished. I think it will take time. We need to be ready for this and we are. We need to be quiet. We shall make decisions when we have decisions. But of course, I hope the best for Europe.
NH: And let's talk about Asia as we are sitting here in Singapore. I understand BNP Paribas has some big expansion; particularly you're looking at your private banking side. Tell us more about the growth opportunity and how you intend to hit those goals.
Jean Lemierre: Well, private banking, corporate banking, we like serving companies in Asia, across Asia, across Europe and Asia and the world. Yes, we are committed. We are investing. We tend to grow in Asia, in all the sectors and activities and this is very positive for us.
NH: Do you foresee completing some acquisitions? In order to complete this growth?
Jean Lemierre: No. And even if we were, I wouldn't tell you.
NH: Well, when it happens, please do come back.
Jean Lemierre: But no we have an organic growth, we recruit, we grow, we develop, we invest in many countries. This is good. This is a good trend for us.
NH: And here at the Singapore Summit, there is a discussion on some of the panels underway about navigating through the new world order. I presume that to mean political as well. With U.S. President Donald Trump now leading the U.S., how do you think that has changed business relationships, if at all, globally speaking? And what is the perception here at the Singapore Summit, about U.S. relations with the region?
Jean Lemierre: With Asia or with Europe?
NH: With both, if you will.
Jean Lemierre: At the end of last year, we had many discussions about protectionism, impact on trade, negative trends. What do I see today? It's positive. We need to be more positive. There has been no negative impact on trade. No protectionist measures. We need to be aware of what's happening, we need to listen and we need to engage. We need to speak. We need also to make decisions according to the decisions which are taken by policy makers. When I look at what's happening today in the U.S., in Asia, in Europe - it's ok. It's supporting growth, businesses, and this is good.
NH: So what is the biggest what is biggest impediment then to making business decisions? Is it political? Is it something else in the market?
Jean Lemierre: Not making decisions, but there is a dimension which is key for each of us. It is technology. Technology is changing the way we operate. Technology will change competition, terms of competition and this is positive. We need to accept this, we need to invest and adapt. But probably one of the main factors we need to take into account today is technology.
NH: Does this mean in terms of job losses? Do you think there will be some sizable job losses as a result of technology? As a result of fintech? And if so, can you quantify those expectations?
Jean Lemierre: No, I do not belong to the group of people who think that technology will destroy jobs. Technology will change the jobs and we need to pay a lot of attention to training, education, adaptation. But at the end of the day, it will be an element for growth and it will be positive. We shouldn't see technology as negative. Technology is a positive element for the world.
NH: Well, that is a glass half full note to end on. Thank you very much for joining us.