Credit score Suisse has signed a deal to suggest its hedge fund shoppers transfer over to BNP Paribas, which is hoping to capitalise on the Swiss financial institution’s withdrawal from prime broking companies within the wake of the Archegos scandal.
Rivals circling Credit score Suisse’s prime brokerage, which serves hedge funds, have an opportunity to select up clients because the Swiss financial institution all but exits the business, which racked up $5.1bn of losses this 12 months following the collapse of household workplace Archegos Capital.
New Credit score Suisse chair António Horta-Osório unveiled a sweeping overhaul of the group final week, together with a broader plan to streamline the funding financial institution and consolidate its wealth administration division.
France’s BNP Paribas, which competes with larger rivals resembling Goldman Sachs and Morgan Stanley in prime companies, swooped on a retreat by Deutsche Financial institution two years in the past and acquired its international prime finance unit and its digital equities enterprise.
It’s nonetheless transferring these prime broking shoppers throughout and integrating the 2 banks’ methods, which it goals to have completed by the top of 2021.
The French financial institution stated on Monday it had signed a referral settlement with Credit score Suisse, which goals to attempt to ease a switch of companies between the 2 banks for shoppers who need that choice.
“Ought to clients search to profit from the referral settlement between BNP Paribas and Credit score Suisse, there will likely be a streamlined course of in place,” BNP Paribas stated in a press release.
Hedge funds that used to work with Credit score Suisse and need to go elsewhere would nonetheless be free to take action. Credit score Suisse has no different agreements of this kind in place for its prime companies, however didn’t rule out signing different ones.
The banks didn’t touch upon any monetary phrases concerned.
BNP is one of the few European banks increasing prime finance, a dangerous however doubtlessly profitable enterprise involving lending cash and dealing with trades for hedge funds, which has lengthy been dominated by Wall Road banks.
BNP can also be pushing to develop its funding banking enterprise to dislodge US rivals in areas resembling mergers and acquisitions advisory in Europe, after some took a step again when the coronavirus pandemic hit in 2020 and native lenders swept in to fill the hole.
The French financial institution has but to overhaul Wall Road heavyweights on the offers entrance. However it has outperformed rivals in its equities buying and selling unit, with fairness and prime companies revenues up 79 per cent within the third quarter, versus a median rise of 35 per cent at large US banks.
