BNP Paribas investment bank under heavy pressure


Major cleaning in BNP Paribas Corporate and Investment Banking (CIB). As for the entire banking sector, this flagship business suffered in 2018 in the first French bank.

" As we know "Jean-Laurent Bonnafé blew Wednesday in introduction of the annual results of the banking group, the activity" Corporate and Institutional Banking "(CIB) saw a 7.5% drop in revenues last year to 10.82 billion, and pre-tax income down 21% to 2.68 billion euros, partly offset by good cost control.

A review of activities is underway

The jolts, but also the transformations experienced by the banking industry, are such that an energetic action plan has been announced. Most visible measure, the unprofitable or undersized activities Are going to be stopped. A review is in progress. The group confirms by the way the extinction of its trading subsidiary for own account, Opera Trading Capital, and the closure of its desk on raw materials in the United States.

" This will continue with 200 to 300 million euros of revenue that could be "exited" "Yann Gérardin, Deputy Chief Executive Officer of BNP Paribas and Head of CIB. In total the group aims to reduce its pounds of about 5 billion euros of risk-weighted assets, after 5.5 billion reductions already achieved in 2018. Mechanical effect, it can focus its own funds to more trades. priorities … or to strengthen its own funds to meet regulatory requirements.

"Near Relocation" in view

Another strong measure, CIB announced Wednesday morning 350 million euros of additional savings by 2020, in addition to the 500 million euros that were already planned. The group as a whole has announced new savings efforts, but the BFI alone will account for 55% of this new effort.

" We will accelerate our electronization, according to the needs expressed by customers "Continues Yann Gérardin. The effort will include the development of "shared platforms", or "nearshoring", that is to say "close relocation".

On the merits, the bank does not expect a return to better fortune, but rather a "selective growth". " We keep the same long-term vision, it is very important to keep a full-function BFI by 2025-2030 ", Says Yann Gérardin.

In detail, market activities ("Global Markets") suffered particularly, with the fixed income and commodities businesses posting a 21.7% decline in revenues over one year. The deterioration is more than perceptible in the fourth quarter, with revenues declining 39.5% quarter-on-quarter (-14.7% in fixed income and -70% in equities). The "corporate banking" branch (structured loans, mergers and acquisitions, etc.) saw its activity fall by 5, 1% over one year, a change partly driven, since the group decided to exit the financing of tobacco or shale gas.

Less "glamorous" at first glance, the trades of clearing, delivery and custody of securities continued their development with an increase of more than 10% of revenues in 2018.

Edouard Lederer