- Voluntary departures plan part of CIB cost-cutting effort
- BNP Paribas CIB unit employs more than 30,000 globally
BNP Paribas SA plans to eliminate as many as 675 positions at its French investment-banking division, or about 11 percent of the unit’s workforce in the country, as regulators increase scrutiny of riskier activities.
The cuts in the corporate and institutional banking unit will be carried out through a voluntary departure program, a spokeswoman for France’s largest lender said on Thursday. The bank is seeking 1 billion euros ($1.1 billion) in annual cost savings at the securities unit by 2019 as it focuses on businesses that absorb less capital and generate higher fees. It also wants to reduce risk-weighted assets by 20 billion euros.
European investment banks are scaling back trading operations under pressure from tougher financial regulation, record-low interest rates and volatile markets. Credit Suisse Group AG last month expanded job cuts at its securities unit, while Deutsche Bank AG is offloading riskier assets to shore up profitability.
“They have no choice,” said Jean Pierre Lambert, a London-based analyst at Keefe, Bruyette & Woods Ltd. with a buy rating on the shares. “It’s deeper than one would have expected.”
The shares rose 0.9 percent in Paris, a fifth straight daily increase. BNP Paribas has lost about 13 percent of its market value this year, while Societe Generale SA dropped 20 percent.
Fourth-quarter pretax profit at the CIB division slipped 9.2 percent to 574 million euros, the bank said in February, announcing plans to cut the unit’s cost base by about 12 percent. The business, headed by Yann Gerardin, employs more than 30,000 people globally.
BNP’s reduction in its investment-banking workforce, its deepest in France since at least 2009, will come through voluntary departures including early retirements or people moving to other divisions. BNP also plans to hire 221 people in corporate and institutional banking over the next three years to develop new technologies such as blockchain, the spokeswoman said.
The planned job cuts were earlier reported by Les Echos.