Source: BNP Paribas
BNP Paribas is pleased to announce it has signed a definitive agreement to acquire the equity prime brokerage business of Bank of America.
The transaction is subject to regulatory approval with completion expected in the second half of 2008. The transaction will involve the transfer of client relationships, employees and technology systems.
Bank of America's equity prime brokerage business provides a wide range of services to hedge funds including secured financing, securities settlement, custody, capital introduction, securities lending, leading-edge technology and custom IT solutions. It is a low risk, low capital consumption, service oriented business. With 13 years of successful growth, more than 500 hedge fund clients, and more than 300 employees, the acquisition of Bank of America's equity prime brokerage business propels BNP Paribas into one of the leading prime brokers in the U.S.
Already a European leader in its CIB activities and a leader globally in Equity Derivatives, BNP Paribas' U.S. CIB strategy has always been to grow in areas where it has real expertise to compete successfully against strong domestic U.S. counterparts. This acquisition is in line with that strategy:
it enables the Bank to offer its cutting-edge EQD platform to an even wider client base while keeping in line with BNP Paribas' risk standards. It allows BNP Paribas to accelerate its organic growth in the US by a targeted acquisition with a very good strategic fit, limited integration risk and negligible impact on Tier 1 capital ratio.
Baudouin Prot, Chief Executive Officer, commented, "The purchase of Bank of America's equity prime brokerage activities shows BNP Paribas' commitment to its Corporate and Investment Banking model. We are confident that this deal will bring significant value to our new customers, the teams who will join us, and the shareholders."
Jacques d'Estais, Global Head of Corporate and Investment Banking at BNP Paribas said, "We're delighted to welcome these clients and employees to the BNP Paribas Group. Having weathered the current financial crisis better than most, BNP Paribas' CIB frananchise is well positioned to continue to grow organically or through targeted bolt on acquisitions. Prime brokerage is an important aspect of doing business with hedge funds, who we believe will continue to play an important role in capital markets, representing a significant revenue opportunity for banks, like BNP Paribas, which have the skills to manage the associated risks."
"BNP Paribas has all the capabilities to become a leader in the prime brokerage industry including a AA+ credit rating, strong balance sheet, global platform and market leading derivatives business. The combination of BNP Paribas' strengths and this excellent equity prime brokerage platform will create a powerful new player in the industry. In partnership with our new colleagues, we are excited about the business we're creating and the services we'll deliver to our new and existing hedge fund clients," added Todd Steinberg, Head of Equities and Derivatives, Americas at BNP Paribas.