People
&Markets
BNP Paribas to set out Brexit plans
BNP PARIBAS is poised to tell London staff
within weeks who will move to Paris or other
Continental European locations as it adjusts
its corporate and investment bank to cope
with Brexit.
The actual moves will take place in early
March, according to people familiar with
the matter, just weeks before the UK’s
OFlCIALûEXITûDATEûATûTHEûENDûOFûTHATûMONTH
If the UK can strike a deal with its EU
counterparts, a transition period until the end
of 2020 will be added to smooth the changes,
which banks are likely to use to give them
breathing space and delay some moves.
It is unclear how many people BNP
Paribas will move, but sources have
previously estimated up to 300 will do so.
Overall the CIB employs 4,715 across the UK.
The bank remains strongly committed to
London and last year made ex-Barclays banker
Matthew Ponsonby head of global banking UK.
Rival SOCIETE GENERALE was reported to be
about to undertake a similar exercise,
setting out how many jobs would have to
move to Paris to cope with Brexit. It employs
4,300 people in the UK.
UK City minister John Glen said last month
HEûEXPECTEDû ûlNANCIALûSERVICESûJOBSûTOû
leave London as a result of Brexit by the end of
NEXTû-ARCHû(EûTOLDûPARLIAMENTûh#LEARLYûWEû
are in a dynamic negotiation where the
French in particular have sought to leverage as
much advantage due to the uncertainty.”
The UK and EU last week made progress on
AûDEALûTOûGIVEû,ONDONSûDOMINANTûlNANCIALû
centre basic access to EU markets after Brexit,
"RITISHûOFlCIALSûSAID ûBUTûNOûAGREEMENTûHASûYETû
been clinched (see Top News).TRADING LULL
The developments came as BNP Paribas last
WEEKûSAIDûITSûWEAKûYEARûINûlXEDûINCOME û
currency and commodities trading
continued in the third quarter. Revenues fell
15% from a year ago to €680m.
4HATûWASûINûLINEûWITHû$EUTSCHEû"ANK ûBUTû
lagged behind the performance of US rivals
and Barclays and UBS.".00ûANDû$EUTSCHEûBLAMEDûONGOINGûQUIETû
markets in Europe, particularly in rates,
compared with the United States, where
recent rate rises have encouraged more
activity and generally helped US banks.
“Client business in rates was still weak in
Europe and the market context was
unfavourable in forex and, to a lesser extent,
in credit,” BNPP said.
#HIEFûOPERATINGûOFlCERû0HILIPPEû"ORDENAVEû
DIDûNOTûFORESEEûANYûUPTICKûOVERûTHEûlNALû
quarter. “The third quarter was not that active
for the FICC business in Europe. We may have
to wait until next year for a return of volatility,”
he said.
Equities and prime services, which the French
bank wraps together, fared better with a 4% rise
in revenues from a year ago to €452m. But it was
NOTûASûSTRONGûASûTHEû53ûBIGûlVEûREPORTEDûANDûWASû
well behind Barclays and UBS.
Other parts of BNPP’s corporate and
institutional banking division proved steady.
Corporate banking’s 2% fall in revenues to
€930m was offset by a 6% rise for the
securities services unit to €503m.
Christopher SpinkFROM THE ARCHIVE: 10 years ago this week
THE FINANCIAL CRISIS
From November 8 2008 issue
RBS: From bad to worse
Last week RBS launched a £20bn
government-backed fundraising
effort against the background of a
financial performance increasingly
affected by the credit crisis and the
worsening economic picture.
Even a one-off gain of £1.44bn
that the bank secured by moving
illiquid assets out of its trading
book was not enough to balance
the group’s appalling financial
performance.
Operating profit for the first nine
months of the year was 8% lowerthan for the same period in 2007,
even before taking into account
credit-related write-downs. The bank
added that derisking and market
dislocation would adversely affect
fourth-quarter and full-year results.
Alongside the poor numbers,
the bank kicked off a huge
government-underwritten capital
increase, comprising a placing
and open offer of £15bn plus a
£5bn issue to the government of
preferred stock. In addition, the
bank completed a £3bn-equivalent
debt issue.Itau powerhouse born
In an unexpected move that took
place after one and a half years of
very discreet negotiations, Brazil’s
Itau and Unibanco announced they
were merging. The deal is, in effect,
a stock-only acquisition of the latter
by the former.
With the move, Itau becomes
Brazil’s largest commercial bank,
with total assets of R$515.8bn
(US$245.6bn) based on the third-quarter results of both institutions.
It therefore surpasses Bradesco,
which has R$422.7bn in total
assets.
But more than becoming a
massive commercial bank, Itau-
Unibanco is set to dominate
the local capital markets and
investment banking landscape, say
rival bankers. A senior banker in
Brazil believes the new entity will
step up bridge loans and revolving
lines with clauses requiring clients
to mandate Itau-Unibanco on
future capital markets deals.
Itau already has a top-tier capital
markets and investment banking
team, which it has accumulated
over the past four years by
aggressively poaching from major
international shops. Those bankers,
plus Unibanco’s own team, are
likely to make the new entity a
powerhouse.Wells Fargo US$11bn deal
No one is disputing that Wells
Fargo’s pending acquisitionof Wachovia Corp will create a
consumer-banking powerhouse,
with retail branches spanning
across the US and an unrivalled
depository base. As is the case
with any financial services firm, the
question is whether the combined
entity is adequately capitalised
after taking US$25bn from the
TARP and raising an additional
US$11bn last week from the sale of
common stock.
The stock offering could be the
largest follow-on sale in US history
if a 15% over-allotment option
is exercised taking proceeds to
US$12.65bn. The greenshoe would
take the bank’s Tier 1 and tangible
equity ratios to 9.1% and 3%,
respectively, from 7.9% and 2.6%
pre-issue.
Wells Fargo had previously said
that it would raise up to US$20bn,
mostly through the sale of common
stock, to boost the capital ratios,
but that was before the TARP
proceeds. No additional capital
raisings are currently envisaged.