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BNP takes advantage of Deutsche Bank revamp with equities deal
[PARIS] BNP Paribas SA became the first bank to take advantage of Deutsche Bank AG's retrenchment in equities, agreeing to back up and potentially assume control of electronic trading and prime services for hedge funds now run by the German lender.
France's largest bank entered a preliminary agreement "to provide continuity of service to prime finance and electronic equities clients," Frankfurt-based Deutsche Bank said in a statement Sunday. The agreement is still subject to approvals and would allow a transfer of technology and staff to BNP Paribas in due course.
Deutsche Bank Chief Executive Officer Christian Sewing took the radical step of cutting about 18,000 jobs and retreating from equities sales and trading. After failed merger talks with crosstown rival Commerzbank AG, the lender is ending a foray into trading that lasted for three decades.
BNP Paribas is one of the few European lenders seeking to strengthen its position in corporate and investment banking across the continent, even after tough market conditions at the end of last year triggered additional cost cuts and an exit from proprietary trading. The French lender has been investing to grow in markets such as Germany and the UK over the last several years.
A rebound in fixed-income trading in the first quarter helped BNP buck the trend of declines seen at most European and Wall Street rivals, but revenue from equities trading and prime services for hedge funds in the first three months fell about 29 per cent from a year earlier, adding to the travails seen the end of last year.