BNP Paribas' plans to cut 6.5% of its work force in its corporate and investment banking division (CIB), which had about 21,400 employees worldwide, will impact its equity derivatives division although no specific headcount reduction is expected in the structured products team, Amaury des Déserts, BNP Paribas' head of European sales distribution structured equity, told SRP.
"We have begun rearranging and reorganising functions in the equity derivatives division but there will be no headcount reduction exercise in our team," said des Déserts. "We are going to reallocate people in sales, marketing and structuring in a different manner to be able to approach the current environment in a more efficient way."
A Paris-based spokesperson told SRP the French group is planning to eliminate 1,400 employees (373 of them will go in France, where the bank's trading operations are based) in its capital markets division, of which the equity derivatives unit is part, and in structured finance: "Like all banks, BNP Paribas must adapt its business to the new regulatory environment," she said. "In September we announced a deleveraging of our balance sheet to reduce risky assets and a headcount reduction in our CIB division."
Des Déserts stressed the equity derivatives and structured products businesses will continue operating as usual with no impact on their ability to serve the market: "We re not doing anything extraordinary or out of the ordinary," he added. "We are just trying to adapt the business to the current market environment and be more flexible and adaptable."
According to des Déserts, this is something all providers are doing, and the logical course for banks wanting to remain competitive in an environment in which the European sovereign debt crisis continues to shake markets and reduce revenue from trading stocks and bonds. In addition, industry watchdogs are forcing banks to set aside more capital for their riskiest operations, cutting the profitability of structured products and fixed income units, he said.
BNP Paribas said on 3 November that it expects about €1.2bn ($1.6bn) in losses from disposals and one-time costs as it speeds up asset cuts to comply with capital requirement rules. The French bank is aiming to reduce its balance sheet by 10%, including cutting €60.7bn ($82bn) in CIB banking assets.