An English subsidiary of the Banque nationale pour le commerce et l’industrie (BNCI), founded in 1947 as a means of developing the bank’s business in London after the Second World War, the British & French Bank was one of the BNP Paribas Group’s forerunner banks in the United Kingdom. It was the Franco-British flagship for commercial, financial and diplomatic relations between France and Great Britain. In many respects, this institution acted as a vehicle for the commercial growth of the Empires of Britain and France in their African colonies.
The birth of an English bank with predominantly French capital
On March 11, 1947, the London branch of the Banque nationale de commerce et de l’industrie (BNCI), which had been operating in that city since 1938, became a subsidiary under British law, taking the name of the “British & French Bank (for Commerce and Industry) Limited”. In 1956, a special resolution was taken to rename it the “British & French Bank Ltd” (B&FB).
As early as February 1941, at a time when all French assets were “frozen” and placed under the control of the Bank of England , the London branch of the BNCI proposed the creation of a bank “under English law” which would operate in parallel with its London-based branch. The idea was supported by the BNCI’s headquarters in Paris, which was prepared to finance the British Bank for Foreign Trade’s acquisition proposal. The idea was that a “British bank” would manage all “purely British” business and much more actively promote the “British character” of the BNCI – something the French branch in London was unable to do, given that it was under the control of the British authorities.
The new bank – the British & French Bank (for Commerce and Industry) Limited – partially assumed the name of its French parent as a demonstration of the efforts made by both parties to create a shared structure, with Britain supplying the manpower and France providing the capital.
The new entity, operating entirely under British law, was 60% owned by the BNCI and 40% by S. G. Warburg & Company Ltd – an associated English bank specialising in investment, with considerable credit resources in London . All of its ordinary share capital was owned by the BNCI, which thus held majority voting rights. The preferred shares, however, were divided among the British financial institutions. The Board of Directors was chaired by a British chairman, Sir S. Findlater Stewart (who would continue to hold this position until 1959), with equal numbers of British and French directors.
It should be noted that all the chairmen appointed as managers of the B&FB were former career diplomats . This may be explained in part by the bank’s specialisation as a dual-nationality “Franco-British” establishment; after all, who better than a diplomat to represent it, and handle all of the cultural and managerial subtleties and peculiarities associated with each of the two countries?
The DNA of the British & French Bank
At the same time as the former BNCI head office was facing growth in its turnover, this legal transformation provided it with foreign exchange resources not provided for under French legislation, and not available to foreign banks in England. The new institution therefore acted as a hub for all of the Group’s sterling transactions, the aim of which was to promote trade between the sterling and franc areas.
The bank very quickly began to offer a wide range of services and finance options to French companies with plans to establish themselves in Britain. It extended its business to cover international trade, specialising in the financing of trade between Commonwealth countries and France and its colonies.
The institution was able to draw upon credit from its mother company, the BNCI, which provided it with direct, rapid banking relationships with mainland France – a considerable advantage for a company of French origin operating from Britain. In this way, for example, an English company buying or selling in France, or another country in which the bank operated, was able to obtain the commercial information or financial assistance it required. It could also rely on faster completion of its transactions when conducted within a single banking network. The B&FB’s customers included French companies from the following sectors: automotive (Renault, Dunlop), textiles (the Groupement d’importation et de répartition de laine, la Compagnie lainière) and British import/export companies.
Establishment of a B&FB subsidiary in Nigeria and development of an extensive network
In late 1949, the British & French Bank opened its first branch in Lagos, Nigeria..
The country – a British protectorate since 1906, and the cornerstone of the West African economy – was in the middle of an economic boom. France and Britain’s colonial territories adjoined one another, and the establishment of a branch here served British and French interests equally.
The BNCI had grown internationally by expanding overseas during the German occupation of France. The bank comprised a network of branches which, over ten years, expanded to cover all of the major countries of Africa, in which it developed a wide range of business interests. And it was mainly through Nigeria that trade with a number of adjoining French territories flowed. The BNCI owned head offices which served as start or end points for a very large proportion of the banking transactions associated with these flows. A Nigeria-based bank would evidently facilitate this work, and serve the business interests of the French territories.
The B&FB’s special relationship with the BNCI facilitated commercial and financial dealings with the banks in the French colonies. In addition, the country’s output – which was growing ever larger and more varied as the country developed – attracted the interest of companies from a very diverse range of sectors (public and private works, transportation, energy distribution, etc.). Furthermore, only two British banks were operating there at that time (Bank of British West Africa and Barclay’s Bank D.C.O.), indicating good growth potential.
Through a five-year agreement signed on March 24, 1950, the BNCI provided an assurance to the B&FB of immunity from any initial operating losses potentially generated by the […] new office in Lagos (Nigeria) whose effect would be to reduce […] profits to a level below that required for the payment of the fixed dividend for your company’s preferential shares.”
According to a special note in the BNCI’s business report for 1950, the Lagos branch was already generating “considerable extra business” in its first year of operation.
In the following years, the B&FB network expanded to cover the whole country, opening offices in Kano (1953), Ebute Metta (1955), Port-Harcourt and Apapa (1956), Ibadan (1958), Kaduna (1960) and Enugu (1961).
Foundation of the Union Bank of Africa (UBA)
In 1958, new banking legislation was introduced in Nigeria prior to the establishment of a central bank in 1959 and the introduction of a new banking decree intended to improve governance over banks.
In 1960, along with 17 other African countries, Nigeria gained its independence, making it the most important country in western Africa, if not the whole of Africa.
In the years from 1958-1960, the BNCI and the B&FB conducted exploratory work in the country and, on the basis of several travel reports, had high hopes for development opportunities in the country. The establishment of a bank operating under Nigerian law was agreed upon,using the B&FB’s existing network in the country. This initiative offered an undeniable political advantage , enabling the bank to participate in the financing of a number of major projects, such as the expansion of the ports of Port-Harcourt and Lagos, and the extension of the railway network in the north-east of the country. There was also a proposal to include two Nigerians on the new bank’s Advisory Board, one of whom was the wife of the Nigerian Minister of Justice. The networks provided by these two individuals played a key role in stimulating the bank’s growth and plans in the country.
The Union Bank of Africa (UBA) was founded in 1961. Other foreign banks were invited to take part in the project, and the final shareholding was broken down as follows: 58% for the British & French Bank, 20% for the Banque nationale africaine (Swiss holding company), 12% for the Banca Nazionale del Lavoro and 10% for the Bayerische Vereinsbank Group.
In January 1973, the Nigerian government took a 37.9% stake in the financial institution, leaving the B&FB with 32.5%; in September 1976, this stake rose to 48.9%, with BNP Limited (formerly the B&FB) retaining 25.5%.
The B&FB’s business and economic model
With its dual geographical bases in Britain and Africa, the B&FB could combine the traditional activities of its London head office with the riskier operations of its Nigerian branches.
With few savers and depositors in Nigeria at that time, current operations in that country needed to be financed by advances from London. Meanwhile, the London division depended as much on the funds held by its customers – attracted by the bank’s membership of the BNCI group – as on the substantial deposits of the BNCI itself, which also owned all the shares in that banking institution: “Thanks to the large permanent deposits maintained in London by the BNCI, we have been able to finance our activities in Nigeria by making some £3 million sterling available to our branches in that country.
In this way, Nigeria enabled the bank to acquire the clientele of most of London’s large product brokers, such as Faure & Fairclough, Oversea Buyers Ltd. (UTC), Bunge (and Warinco Zurich), British Italian Trading and companies from a variety of business sectors, such as United Transport, National Cash Register (London), the André Group of Lausanne and Noga of Geneva; others held accounts in London which had been created in Nigeria, such as the West African Trade Corporation (SCOA) (thus tapping into a large Lebanese community of major European commercial companies, generating more than 70% of their turnover abroad), along with oil companies and some foreign entrepreneurs.
In addition to customers who were British or had their European headquarters in London, the B&FB’s clients in London were divided between an expatriate Indian client base – whose commercial and financial activities were carried out entirely and exclusively outside India, with London as the central point for their business – and Greek customers, who had substantial deposit accounts.
In order to acclimatise its British staff to BNCI philosophy and methods, short courses in Paris were set up for a number of B&FB employees. Similarly, the bank established a promotion ladder for Nigerian employees who were to assume positions of responsibility, initiating a training programme in London for the most “promising” among them, for periods limited to 3 months.
Handover to the Banque Nationale de Paris Limited (BNP Ltd)
Following the May 1966 merger of the BNCI and the CNEP in France, creating the BNP, the new bank sought to consolidate its business in the United Kingdom. To do this, the CNEP subsidiary in London merged with the British & French Bank Limited in 1967, which was at that time under the direction of Sir John Balfour (who had been managing B&FB since 1959). The new entity moved into the buildings occupied by the CNEP at 8-13 King William Street, and its staff formally became employees of the new bank. Its capital increased from £2,000,000 to £3,000,000.
It was not until March 29, 1974, under the leadership of Sir Patrick Reilly, that Banque Nationale de Paris Limited (BNP Ltd) assumed the mantle of the British & French Bank Ltd, becoming the Banque Nationale de Paris plc (BNP plc) in 1981. This eight-year wait can be explained by development strategy imperatives: the management team at that time, referring to the “Etude d’implantation de la Banque nationale de Paris à Londres” survey, concluded that by retaining the name of the subsidiary incorporated on the B&FB network, it would be better equipped for more aggressive commercial operations in an already highly competitive environment. The main argument was based on the excellent growth results achieved by the B&FB in comparison to other branches of French banks in London. Amid an environment of Europeanisation and the opening up of its financial centres, an “English” bank would be more able to consolidate the positions it had already acquired, and to develop further.
What lessons can be learned?
For 27 years, the British & French Bank embodied the Franco-British alliance in the form of a financial and economic framework. The bank acted as a point of contact, followed by a bridge, between a French bank and an English bank. The African adventure, meanwhile, demonstrated that in addition to a mere alliance, it was even possible to conduct a commercial and economic strategy that was in the interests of both countries.
An English management structure, with mainly French capital, managed by a Franco-British team: these were the ingredients of the success of this Anglo-French bank, one of the forerunners of the BNP Paribas Group in the United Kingdom.