BNP Paribas is pleased to announce it has signed a definitive agreement to acquire the equity prime brokerage business of Bank of America. The transaction is subject to regulatory approval with completion expected in the second half of 2008. The transaction will involve the transfer of client relationships, employees and technology systems.
Bank of America's equity prime brokerage business provides a wide range of services to hedge funds including secured financing, securities settlement, custody, capital introduction, securities lending, leading-edge technology and custom IT solutions. It is a low risk, low capital consumption, service oriented business. With 13 years of successful growth, more than 500 hedge fund clients, and more than 300 employees, the acquisition of Bank of America's equity prime brokerage business propels BNP Paribas into one of the leading prime brokers in the U.S.
Already a European leader in its CIB activities and a leader globally in Equity Derivatives, BNP Paribas' U.S. CIB strategy has always been to grow in areas where it has real expertise to compete successfully against strong domestic U.S. counterparts. This acquisition is in line with that strategy: it enables the Bank to offer its cutting-edge EQD platform to an even wider client base while keeping in line with BNP Paribas' risk standards. It allows BNP Paribas to accelerate its organic growth in the US by a targeted acquisition with a very good strategic fit, limited integration risk and negligible impact on Tier 1 capital ratio.
Baudouin Prot, Chief Executive Officer, commented, “The purchase of Bank of America's equity prime brokerage activities shows BNP Paribas' commitment to its Corporate and Investment Banking model. We are confident that this deal will bring significant value to our new customers, the teams who will join us, and the shareholders.”
Jacques d'Estais, Global Head of Corporate and Investment Banking at BNP Paribas said, “We're delighted to welcome these clients and employees to the BNP Paribas Group. Having weathered the current financial crisis better than most, BNP Paribas' CIB franchise is well positioned to continue to grow organically or through targeted bolt on acquisitions. Prime brokerage is an important aspect of doing business with hedge funds, who we believe will continue to play an important role in capital markets, representing a significant revenue opportunity for banks, like BNP Paribas, which have the skills to manage the associated risks.“
“BNP Paribas has all the capabilities to become a leader in the prime brokerage industry including a AA+ credit rating, strong balance sheet, global platform and market leading derivatives business. The combination of BNP Paribas' strengths and this excellent equity prime brokerage platform will create a powerful new player in the industry. In partnership with our new colleagues, we are excited about the business we're creating and the services we'll deliver to our new and existing hedge fund clients” added Todd Steinberg, Head of Equities and Derivatives, Americas at BNP Paribas.
About Corporate and Investment Banking at BNP Paribas:
BNP Paribas Corporate and Investment banking division (CIB) has 15,000 employees, deployed in over 50 countries around the world. It operates in advisory and capital markets (Corporate Finance, Equities, Fixed Income) as well as in financing businesses (Energy, Commodities, Export and Project Finance and Structured Finance). CIB excels in three fundamental sectors in particular:
Derivatives - it is one of the leading global players in rates, credit, forex, commodity and equity derivatives
Capital markets - it is amongst the top ten Euro houses for both ECM and DCM (bond issues, securitization, convertibles and shares).
Structured finance - it is amongst the world leaders for acquisition, export, project and commodity finance. For further information please visit our website at http://cib.bnpparibas.com/
About BNP Paribas
BNP Paribas (www.bnpparibas.com) is a European leader in global banking and financial services and is one of the 4 strongest banks in the world according to Standard & Poor's. The group is present in over 85 countries, with 163,000 employees, including more than 126,000 in Europe and 15,000 in North America. The group holds key positions in three major segments: Corporate and Investment Banking, Asset Management & Services and Retail Banking. Present throughout Europe in all of its business lines, the bank's two domestic markets in retail banking are France and Italy. BNP Paribas also has a significant presence in the United States and strong positions in Asia and the emerging markets.