Credit Suisse has signed a referral agreement with BNP Paribas for its prime services and derivatives clearing customers following its exit from the business in a huge win for the French banking group.
BNP Paribas was propelled into the top tier of prime brokers in 2019 when it onboarded Deutsche Bank’s clients which represented around $200 billion in assets, allowing it to compete with the likes of Goldman Sachs, JP Morgan and Morgan Stanley.
The transition of Credit Suisse’s prime services clients represents a major boon for BNP Paribas in its efforts to continue to grow the business which has undergone significant changes over the past year.
An expanded unit was planned earlier this year as the bank’s corporate and investment bank business accelerates development of its equity businesses, with prime services set to become more closely linked with its equity brokerage Exane to further grow the franchise.
“Credit Suisse will support affected customers as they select alternative Prime Services providers of their choice,” said BNP Paribas in a statement. “Should customers seek to benefit from the referral agreement between BNP Paribas and Credit Suisse, there will be a streamlined process in place to facilitate them obtaining Prime Services from BNP Paribas, under its terms.”
Credit Suisse announced last week it would all but exit prime services following the fallout from the collapse of Archegos Capital Management which cost the Swiss-bank $5.5 billion and forced a wholesale review of risk management across the business.
On the day of its third quarter earnings reveal, the bank said it would now place risk management at the core of its bank and focus on a “culture that reinforces the importance of accountability and responsibility”.
Two smaller parts of the prime services – Index Access and APAC Delta One – will remain active.
In addition, Credit Suisse will reduce its long duration structured derivatives book, while exiting approximately 10 non-core Global Trading Solutions markets, which it believes will lead to an expected capital reduction of 25% from 2020 levels by next year.
Starting from January next year, the Group will be reorganised into four divisions with a “simplified model” – wealth management, investment bank, Swiss bank, and asset management.