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BNP Paribas targets investment-banking lift

By Lionel Laurent and Matthias Blamont PARIS (Reuters) - BNP Paribas , France's biggest listed bank, said its investment banking arm would post a compound annual growth rate of revenue above 6 percent over the next three years through a plan to expand outside Europe and boost product cross-selling. BNP, seen by investors as robustly capitalised and conservative compared with rivals like Deutsche Bank or Barclays , is in the early stages of a new plan to cut costs and shift more resources to North America and Asia as European banks struggle with new regulation and economic uncertainty. The new strategy will deliver a double-digit percentage rise in overall earnings over the next three years, an increased dividend payout and an improved return on equity (ROE) of 10 percent by 2016, the bank has said. Although some investment banks such as UBS and Royal Bank of Scotland have exited entire product lines rather than compete on all fronts, BNP is committed to keeping a broad array of business lines and to growing its client base, the bank said at an investor event to present its new strategy. "We have decided to keep a diversified business," Alain Papiasse, BNP's head of corporate and investment banking, said. The bank has already seen a net increase in full-time staff in Asia of 400 over 2013 as part of a planned hiring spree. In addition to the planned revenue growth, BNP's investment bank is expecting a drop in its cost-income ratio of nine points by 2016, to 60 percent. No details on cost-saving measures were given but the bank said it would merge some sector-specific teams and cross-sell capital markets and custody expertise. BNP has directly profited from rivals' restructuring in some cases: the bank has agreed deals with Credit Agricole and RBS to take over their equity derivatives portfolios. But some analysts have said that BNP's profit targets are relatively underwhelming. Societe Generale expects to reach an ROE of 10 percent by 2015, a year earlier than BNP, while UBS and Deutsche Bank are respectively targeting 15 percent in 2016 and 12 percent in 2015. Shares of BNP were down 1.1 percent at 1127 GMT, slightly underperforming a 0.6 percent fall for the STOXX Europe 600 banks index <.SX7P>. RUSSIA UNCERTAINTY BNP, which is open to bolt-on acquisitions to boost market share, is also eyeing a push into Central and Eastern Europe with its agreement to acquire Polish bank BGZ. Although BNP does not own a bank in Russia, where U.S.-imposed sanctions over the annexation of Ukraine's Crimea have begun to bite, it does own a minority stake in a consumer finance venture with Russia's Sberbank and also owns Ukrainian lender UkrSibbank. "The decisions taken (on Russia) will lead to us distancing ourselves from a certain number of counterparties," BNP Chief Executive Jean-Laurent Bonnafe said. In Ukraine, it is more "business as usual" but the bank is taking care to protect its employees, he added. Although the European Union is not keen to escalate the crisis, it is united in its readiness to impose economic sanctions on Russia if the stand-off over Ukraine intensifies, Germany's finance minister said on Sunday. (Reporting by Lionel Laurent; Editing by Natalie Huet and Andrew Callus)