BNP Paribas’ Cortal bought German eBrokerage Consors in April, creating powerhouse CortalConsors. While it has E14 billion under management and a large customer base, reviving Consors’ fortunes and positioning the new firm as a profitable, pan-European asset-gathering leader will take more than brute force.
Germany’s Consors has announced a 13% fall in losses and a 43% fall in trades for Q1 2002.
German online broker Consors has released its Q1 2002 results, a week after BNP Paribas’ Cortal online broking agreed to buy the company for E287 million. Although a 13% fall in losses is good news, the company’s trading activity has fallen by 43%. So given these results, will the imaginatively titled CortalConsors be one of the few standalone eWealth managers to survive the current shakedown?
CortalConsors certainly has genuine critical mass at a pan-European level, having acquired a large ready-made customer base at relatively low cost. It also has a well-diversified product base, meaning it can use Consors’ high-end equities trading capabilities and Cortal’s expertise in investment products to create cross-selling opportunities in both the French and German markets.
However, the bear market is continuing to impact negatively on the self-directed investor market, as customer acquisition rates are still slowing and commissions have been slashed to almost negligible levels. Reversing this will not be easy, and the high integration costs of the merger are unlikely to help revive the flagging Consors in the short term.
To guarantee future success, BNP Paribas needs a clear strategy for positioning CortalConsors. Pan-European expansion has proved problematic for eBrokers, and balancing Cortal’s conservative investors with Consors’ active day traders will not be easy. The building blocks for a leading-edge eWealth offering are certainly in place, but discount brokerage services and a wide product range alone will not be sufficient to avoid the fate of many eBrokers.
Rather, CortalConsors needs to position itself as an integrated wealth management play, offering eAdvice, rich graphical reporting and advanced portfolio management tools. As more and more European banks champ at the asset-gathering bit, impeccable value-added execution will be essential.
Related research: Datamonitor, 2002: eInvestment Strategies in Europe 2002