BNP Paribas will become the latest bank to move into the infrastructure sector by launching a €1bn ($1.3bn) fund early next year.

The bank has started recruiting fund managers and advisers to run the operation in Paris, which will be housed within BNP Paribas Asset Management. It is the first French bank to make a significant move into the asset class following European rivals including Credit Suisse, Deutsche Bank, ING and HSBC, which have hoped to mimic the success of Australian institutions Macquarie and Babcock & Brown. Gilles Glicenstein, chairman of BNP Paribas Asset Management, said the fund would aim for €1bn in investments. He declined to say how big the division would be. Last month, analysts at Swiss bank UBS estimated there was up to $1.3 trillion (€1 trillion) of short-term demand for infrastructure assets. They said banks' European income from the sector could rise from 1% of revenues to 5%. However, some analysts predict a bubble is developing in infrastructure deals as money pours in.