Credit Suisse has signed an agreement to recommend its hedge fund clients to move to BNP Paribas, which hopes to capitalize on the Swiss bank’s withdrawal from prime brokerage services in the wake of the Archegos scandal.
Competitors around Credit Suisse’s prime brokerage firm, which serves hedge funds, have a chance to pick up clients as the Swiss bank leaving everything but the business, which suffered $ 5.1 billion in losses this year following the collapse of the family-owned Archegos Capital office.
Credit Suisse’s new chairman, António Horta-Osório, unveiled a radical overhaul of the group last week, including a broader plan to streamline the investment bank and consolidate its wealth management division.
France’s BNP Paribas, which competes with major competitors such as Goldman Sachs and Morgan Stanley in prime services, intervened on a retreat by Deutsche Bank two years ago and bought its global prime financing unit and its electronic stock business.
It is still transferring those prime brokerage clients and integrating the two banks’ systems, which it intends to have done by the end of 2021.
The French bank said on Monday it had signed a referral agreement with Credit Suisse, which is aimed at trying to facilitate a transfer of services between the two banks for customers who want that option.
“If customers try to take advantage of the referral agreement between BNP Paribas and Credit Suisse, there will be a streamlined process in place,” BNP Paribas said in a statement.
Hedge funds that used to work with Credit Suisse and want to go elsewhere will still be free to do so. Credit Suisse has no other agreements of this type in place for its main services, but has not ruled out signing others.
The banks did not comment on any financial terms involved.
GDP is one of the few European banks the expansion of prime finance, a risky but potentially lucrative business that involves borrowing money and handling hedge fund trades, which has long been dominated by Wall Street banks.
GDP also urges to grow its investment banking business to oust US rivals in areas such as advisory mergers and acquisitions in Europe, after some took a step back when the coronavirus pandemic hit in 2020 and local lenders flocked to fill the gap .
The French bank has not yet surpassed Wall Street heavyweights on the transaction front. But it outperformed competitors in its stock trading unit, with equities and prime services revenues rising 79 percent in the third quarter, compared to an average rise of 35 percent at major U.S. banks.