BNP Paribas is restructuring its prime brokerage unit, a business that has gained little traction since its inception three years ago, according to rivals and clients. The firm likely will try to carve out a niche playing to its strengths in structured products and derivatives, rather than trying to continue to compete in the full service prime brokerage market, according to officials familiar with the unit.
Edwina Frawley, spokeswoman at BNP, declined comment and Frédérique Barnier-Bouchet, global head of prime brokerage in Paris, did not respond to messages. Barnier-Bouchet, who has served some 25 years with the bank, is thought to be considering alternative opportunities both within the bank and externally.
One prime brokerage client said it will consider switching firms unless BNP puts its house in order in the coming months. "We've perceived that there's something going on," he said, referring to staff changes, such as the resignation of Justin Haque last month. Haque only joined BNP in July to cover sales to hedge funds. "We have not been notified by the bank of anything," said the client.
BNP's group has not made an impact in the notoriously competitive prime brokerage arena, said a hedge fund professional. "In this business, you have to be either a leader like Goldman Sachs or Morgan Stanley, or a niche player," a rival added. "BNP [Paribas] falls through the gap between those roles." Market officials pointed to Barclays Capital as an example of a prime brokerage shop that has successfully created a niche providing financing to funds.
BNP announced in December it is going to hive off its cash equity business into a separate entity with French broker Exane and this further weakened the bank's prime brokerage effort, according to one rival.