BNP Paribas has signed a definitive agreement to acquire the equity prime brokerage business of Bank of America, a transaction that will involve the transfer of client relationships, emplo
BNP Paribas has signed a definitive agreement to acquire the equity prime brokerage business of Bank of America, a transaction that will involve the transfer of client relationships, employees and technology systems. The deal is subject to regulatory approval and completion is expected in the second half of the year.
Bank of America’s equity prime brokerage business provides a wide range of services to hedge funds including secured financing, securities settlement, custody, capital introduction, securities lending, leading-edge technology and custom IT solutions.
BNP Paribas says the acquisition of the 13-year-old business, which has more than 500 hedge fund clients and more than 300 employees, will elevate it to the ranks of the leading prime brokers in the US.
The French-based institution says its US corporate and investment banking has been focused on growth in areas where it has genuine expertise, such as equity derivatives, to compete against strong domestic US rivals, and that the latest acquisition is in line with that strategy.
‘It enables the bank to offer its cutting-edge equity derivatives platform to an even wider client base while keeping in line with BNP Paribas’ risk standards,’ the bank said in a statement. ‘It allows BNP Paribas to accelerate its organic growth in the US by a targeted acquisition with a very good strategic fit, limited integration risk and negligible impact on tier 1 capital ratio.’
Chief executive Baudouin Prot says: ‘The purchase of Bank of America’s equity prime brokerage activities shows BNP Paribas’ commitment to its corporate and investment banking model. We are confident that this deal will bring significant value to our new customers, the teams who will join us, and the shareholders.’
Jacques d’Estais, global head of corporate and investment banking at BNP Paribas, adds: ‘Having weathered the current financial crisis better than most, BNP Paribas’s corporate and investment banking franchise is well positioned to continue to grow organically or through targeted bolt-on acquisitions.
‘Prime brokerage is an important aspect of doing business with hedge funds, who we believe will continue to play an important role in capital markets, representing a significant revenue opportunity for banks, like BNP Paribas, that have the skills to manage the associated risks.’
Says Todd Steinberg, head of equities and derivatives for the Americas at BNP Paribas: ‘BNP Paribas has all the capabilities to become a leader in the prime brokerage industry including a AA+ credit rating, strong balance sheet, global platform and market-leading derivatives business.
‘The combination of BNP Paribas’s strengths and this excellent equity prime brokerage platform will create a powerful new player in the industry. In partnership with our new colleagues, we are excited about the business we’re creating and the services we’ll deliver to new and existing hedge fund clients.’
BNP Paribas corporate and investment banking division has 15,000 employees in more than 50 countries worldwide. It is active in advisory and capital markets (corporate finance, equities, fixed income) as well as in financing businesses (energy, commodities, export and project finance and structured finance), and specialises in particular in derivatives, debt and equity capital markets and structured finance. The BNP Paribas group is present in more than 85 countries and has 163,000 employees, including more than 126,000 in Europe and 15,000 in North America.
