French banking giant BNP Paribas has announced an agreement to purchase HSBC's private banking operations in Germany, in a move aimed at strengthening its position as a leading wealth management player in Europe's largest economy.

The acquisition, expected to close in the second half of 2025 pending regulatory approvals, will boost BNP Paribas Wealth Management's assets under management in Germany to over €40 billion. This strategic move aligns with BNP Paribas' ambition to become one of the top wealth management providers in the country.

Vincent Lecomte, chief executive officer of BNP Paribas Wealth Management, commented on the deal: "This acquisition is a new crucial step in positioning BNP Paribas Wealth Management among the leading players in Germany, where we believe our model is best suited to serve the long-term needs of entrepreneurial clients, leveraging on the strong franchises of the Group to both address their personal and corporate needs. It will therefore contribute to consolidate our position as the first Wealth Management player in the Eurozone."

Germany represents a key market for BNP Paribas, offering significant growth potential in wealth management, particularly within the Mittelstand (German SMEs) and among German entrepreneurs and families. The bank aims to capitalise on its diversified business model to provide comprehensive services ranging from investment and corporate banking to asset management.

Lutz Diederichs, chief executive officer of BNP Paribas Germany, emphasised the strategic importance of the German market: "Germany is a key strategic market for BNP Paribas with a local presence of more than 75 years. Our twelve business lines make our business model one of the most diversified and resilient ones in the German banking sector."

The acquisition of HSBC's private banking activities, which focuses on high-net-worth and ultra-high-net-worth individuals, is expected to complement BNP Paribas' existing operations in Germany. It will enhance the bank's regional coverage, particularly in North Rhine-Westphalia.

For HSBC, this divestment aligns with its strategy of streamlining operations and focusing on core markets. In recent years, HSBC has reduced its presence in several Western markets, including the US, France, and Canada, as it concentrates on its strengths in Asia.

The deal comes at a time when Germany's economic outlook faces challenges. Recent data showed a significant drop in investor confidence, with the ZEW institute's expectations gauge falling to its lowest level in almost a year. Achim Wambach, president of ZEW, noted: "The hope for a swift improvement in the economic situation is visibly fading."

Despite these economic headwinds, the semiconductor industry in Germany continues to attract investment. Taiwan Semiconductor Manufacturing Co. recently broke ground on its first European plant in eastern Germany, with about half of the €10 billion project funded by state subsidies.

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