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Credit Suisse to recommend its hedge fund clients join BNP Paribas

Credit Suisse has signed a deal to recommend its hedge fund clients move over to BNP Paribas, which is hoping to capitalise on the Swiss bank’s withdrawal from prime broking services in the wake of the Archegos scandal.

Rivals circling Credit Suisse’s prime brokerage, which serves hedge funds, have a chance to pick up customers as the Swiss bank all but exits the business, which racked up $5.1bn of losses this year following the collapse of family office Archegos Capital.

New Credit Suisse chair António Horta-Osório unveiled a sweeping 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 bigger rivals such as Goldman Sachs and Morgan Stanley in prime services, swooped on a retreat by Deutsche Bank two years ago and bought its global prime finance unit and its electronic equities business.

It is still transferring those prime broking clients across and integrating the two banks’ systems, which it aims to have done by the end of 2022.

The French bank said on Monday it had signed a referral agreement with Credit Suisse, which aims to try and ease a transfer of services between the two banks for clients who want that option.

“Should customers seek to benefit from the referral agreement between BNP Paribas and Credit Suisse, there will be a streamlined process in place,” BNP Paribas said in a statement.

Hedges funds that used to work with Credit Suisse and want to go elsewhere would still be free to do so. Credit Suisse has no other agreements of this type in place for its prime services, but did not rule out signing other ones.

The banks did not comment on any financial terms involved.

BNP is one of the few European banks expanding prime finance, a risky but potentially lucrative business involving lending money and handling trades for hedge funds, which has long been dominated by Wall Street banks.

BNP is also pushing to grow its investment banking business to dislodge US rivals in areas such as mergers and acquisitions advisory in Europe, after some took a step back when the coronavirus pandemic hit in 2020 and local lenders swept in to fill the gap.

The French bank has yet to overtake Wall Street heavyweights on the deals front. But it has outperformed rivals in its equities trading unit, with equity and prime services revenues up 79 per cent in the third quarter, versus an average rise of 35 per cent at big US banks.

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