Deutsche Bank shifts its prime brokerage to BNP with 1,000 jobs

Bloomberg

Deutsche Bank AG finalised a deal transferring its business with hedge fund clients to BNP Paribas SA as part of the German lender’s historic retreat from investment banking.
About 1,000 Deutsche Bank employees will move to the French rival through 2021, according to people with knowledge of the matter. Ashley Wilson, one of two executives at the German bank overseeing the disposal of unwanted assets, will head the business during this period and may eventually leave to run the combined unit at BNP, the people said, asking not to be identified as the matter is private.
The volume of assets BNP will ultimately add remains uncertain because Deutsche Bank’s client balances slumped by about half to $80 billion since it announced its intention to transfer the business. The lenders expect clients to come back now that there’s more certainty, the people said.
The two firms had agreed on the move in principle in early July, as Deutsche Bank Chief Executive Officer Christian Sewing retreats from equities trading — which houses the prime business — in the bank’s biggest restructuring in decades. But finalising the accord has been complicated by the client defections. For Sewing’s counterpart at
BNP, Jean-Laurent Bonnafe, the deal could bring the scale needed to compete with the bigger players.
Shares of both lenders fell along with the broader market. Deutsche Bank declined 3.5 percent in Frankfurt, curbing gains this year to 1.3 percent. BNP lost 2.8 percent in Paris and is up 11 percent in 2019.
The agreement, which is subject to regulatory approval, could vault BNP into the global top 4 of prime brokerages over the next 12 months, reaching $250 billion to $300 billion in client balances eventually, according to the people. Deutsche Bank will continue to manage the platform until clients can be passed over, the two banks said.
“Now that the deal has signed, we believe we have the basis to regain and expand on the business,” Deutsche Bank COO Frank Kuhnke said.
The agreement comes just a few days after Deutsche Bank sold its first portfolio of equity derivatives, another key step to exit equities trading and get
the associated assets off its balance sheet.
The deal will give BNP the technology it needs to improve trading with asset managers and hedge funds specialising in quantitative strategies, Olivier Osty, global head of markets at the Paris-based bank, said in
an interview.