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BNP Paribas eyes becoming Europe's top prime broker to hedge funds – FT

BNP Paribas SA plans to unseat Barclays PLC as Europe's top global prime broker to hedge funds, leveraging on its acquired business from Deutsche Bank AG, Olivier Osty, head of global markets at France's biggest investment bank, told the Financial Times.

Osty added that BNP Paribas could also become one of the top four players in the sector globally, joining U.S. peers that have been dominating the business for years, the newspaper reported June 8. In 2019, BNP Paribas' prime brokerage business ranked 11th globally, while that of Deutsche Bank came in the seventh to ninth place in league tables, the FT wrote, citing Coalition data.

BNP Paribas agreed to acquire the German bank's global prime finance and electronic equities businesses in September 2019 and clinched approval for it in November of the same year. The deal included the migration of technology and key staff covering the business and the transfer of tens of billions of euros of client assets.

Upon completion of the integration process, expected in early 2021, BNP Paribas' business would have more than $300 billion of assets, up to $200 billion of which would come from Deutsche Bank, Osty told the FT. He added that the business is bound to rake in hundreds of millions in annual revenues, without disclosing specific financial targets.

However, U.S. players currently dominating the prime brokerage business such as JPMorgan Chase & Co. and Morgan Stanley could prove hard to shake given the massive scale of their operations, the FT wrote. The combined BNP Paribas and Deutsche Bank business would have to gain a market share of more than 12% to become a top-three global player, according to the Coalition data.

Osty said BNP Paribas has been taking market share over the past 1.5 years and in the first quarter, adding that the trend is "definitely positive" and that the coronavirus pandemic will likely increase the bank's chances as smaller players withdraw their businesses, according to the report.

So far, 125 of about 800 staff from Deutsche Bank have been transferred to BNP Paribas, including senior figures, Ashley Wilson, co-head of Deutsche Bank's prime finance unit, said. Wilson himself is set to transfer, along with Brian Fagen, head of execution services for the Americas, and Andy West, global head of prime technology.