BNP Paribas has relinquished its ambition to win U.S. high-yield lead underwriting mandates and has parted company with David Weinstein, U.S. head of high-yield origination and capital markets. Instead, the firm will concentrate on developing as a co-manager and shoring up its position in the secondary market, according to an official familiar with the plan. David Barcus, a merchant banker, will lead the U.S. origination business under newly promoted global origination head John Ong. Weinstein and Barcus declined comment. Ong did not return calls.
Nicky Brown-Gilstrap, a spokeswoman at BNP Paribas in New York, says the firm has restructured its business. Her supervisor, media relations director Mark Wisniewski, declined to respond to further questions from BW.
The French firm is the latest casualty of the U.S. high-yield market, following scaling back by Merrill Lynch, Barclays Capital, Société Générale and TD Securities.
The failure of these businesses demonstrates that there are simply too many high-yield dealers for the market to support, according to Fred Cohen, head of global high-yield at Banc of America Securities. "Merrill is a different case which I won't comment on, but otherwise what you're looking at are European or non-U.S. commercial banks. They're lenders, but they're not leads on the lending side, and they were getting what you can get for that, which is relatively small co-manager positions," he says. "Perhaps they thought they could get more from their lending businesses than they did."
A senior high-yield official says Weinstein, a veteran of BankBoston and Chase Manhattan, was over-qualified to run BNP Paribas' U.S. origination business, given the relatively small resources the firm has in that area. Another senior high-yield banker says to run a full-service high-yield operation in the U.S. requires an annual commitment of approximately $30 million. It could not be determined by press time how much capital BNP Paribas allocated to its high-yield group.
At the same time as the pullback in origination, BNP Paribas has upgraded its trading business with the hire of Rob Lambert from Société Générale to the new position of head U.S. high-yield trader. Meanwhile Gene Borg, a senior high-yield trader in New York, has left the firm. Borg could not be reached and reasons for the departure could not be determined by press time.