Paris Bank Traders Go on a Ruinous Losing Streak
Taking big risks in the hugely competitive equity derivatives market wasn’t a winning strategy. Only BNP has the scale to take the losses in its stride.
Not exactly a shining beacon.
Photographer: Christophe Morin/BloombergFrance’s biggest banks have lost their savoir faire at one of the worst possible times. Bets that went awry on equity derivatives — once a craft in which the French firms excelled — have cost BNP Paribas SA, Societe Generale SA and Natixis SA hundreds of millions of dollars in income this year. They’ve also cost several top executives their jobs.
Of the three banks, only BNP will get past this relatively unscathed, and that serves as a cautionary tale to others. Relying too much on a hugely volatile, risky activity such as stock derivatives is a dangerous strategy reminiscent of pre-financial crisis times. The companies’ boards and regulators should have seen this coming.