|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||35.42 - 36.43|
|52 Week Range||24.50 - 54.22|
|Beta (5Y Monthly)||1.62|
|PE Ratio (TTM)||6.46|
|Earnings Date||Nov 03, 2020|
|Forward Dividend & Yield||N/A (N/A)|
|Ex-Dividend Date||May 25, 2020|
|1y Target Est||61.49|
(Bloomberg) -- BNP Paribas SA has suspended new commodity trade finance deals while it reviews its involvement in the business in Europe, Middle East and Africa, according to people familiar with the matter.The French bank, one of the largest lenders to global commodity traders, has recently told clients that no new deals will be concluded unless there’s a contractual obligation, said the people, who asked not to be identified because the information isn’t public. BNP is currently reviewing options for the future of its EMEA commodity trade finance business, the people said.The move comes after the bank took a hit from commodity trade houses facing financial stress from Dubai to the U.S., the people said. BNP’s commodity trade finance team suffered heavy losses from the bank’s exposure to companies including crop trader Phoenix Group, energy firm GP Global Group as well as coffee dealer Coex Coffee International Inc., the people said.Alexandra Umpleby, a spokeswoman for BNP Paribas, declined to comment.BNP is considering the future of its Specialized Trade Solutions unit, known as STS, which handles commodities trade finance deals in energy, agriculture and metals mostly from Geneva, the people said. Options include shutting the business or merging it with the bank’s broader transactions services division.BNP Paribas, through the Geneva office of what was then Paribas, pioneered the use of letters of credit to finance oil trading in the 1970s, working with Marc Rich among others. As the business of financing commodity traders grew, the bank was for many years the leading lender to the industry, accounting for as much as half of some trading houses’ bank lines. In recent years, it has been a diminished presence, but trading executives estimate that it still ranks among the top 10 providers of financing to the industry.The bank has been shrinking its commodity trade finance business since 2014, when it was fined $8.9 billion for violating U.S. sanctions. No matter what option it pursues now, it’s planning to substantially retrench from the business, the people said.BNP’s move follows a pullback by Societe General SA. SocGen is closing its trade commodity finance unit in Singapore following the collapse of Hin Leong Trading (Pte) Ltd. The bank will handle large Asian commodities trading clients from Hong Kong, according to people familiar with the matter, and cut ties with smaller firms.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- France’s biggest banks have lost their savoir faire at one of the worst possible times. Bets that went awry on equity derivatives — once a craft in which the French firms excelled — have cost BNP Paribas SA, Societe Generale SA and Natixis SA hundreds of millions of dollars in income this year. They’ve also cost several top executives their jobs.Of the three banks, only BNP will get past this relatively unscathed, and that serves as a cautionary tale to others. Relying too much on a hugely volatile, risky activity such as stock derivatives is a dangerous strategy reminiscent of pre-financial crisis times. The companies’ boards and regulators should have seen this coming.BNP, the biggest of the three lenders, expects profit to fall by no more than 20% this year, in part thanks to a surge in fixed-income trading that helped it offset the dismal performance in equities. In the midst of a global pandemic, a dent in income of this relatively small magnitude would be an achievement, helped too by comparatively low provisions for bad loans.The news wasn’t so good at SocGen. The Paris-based bank posted its biggest quarterly loss in a dozen years in the three months to June as revenue from equity derivatives plummeted. After downsizing its fixed-income business last year, SocGen was even more exposed to complex trades, which made up a fifth of the revenue at its market unit last year. Stock derivatives are financial instruments that let traders speculate on movements in equities and indexes, while hedging some of the risks. They can be lucrative trades if things go well, but that isn’t always the case — as the French banks have demonstrated.Within hours of reporting the dismal results, SocGen revamped its management, axing two deputies to Chief Executive Officer Frederic Oudea. In the top job for more than a decade, Oudea is now counting on cutting costs across the investment bank, retreating from some structured products and redeploying capital to where he can eke out bigger profits. As I’ve argued before, the firm is paying the price of Oudea’s over-reliance on trading.At Natixis, the derivatives blunder has been just as costly. The bank posted a loss in the three-month period, its second consecutive quarter in the red, and ousted its CEO Francois Riahi. Concerns about the running of one of its affiliates, H20 Asset Management, which over-invested in thinly traded bonds, had already raised concerns about the company’s risk management and controls. Riahi had rebuilt Natixis by betting on yet more speculative trades.The three banks have one thing in common: They all focused on structured products that are more susceptible to market swings, and they were exposed to derivative bets on corporate dividends, which backfired when the pandemic struck and companies halted shareholder payouts to preserve cash. The three made almost 40% of their equities revenue from structured products last year. That’s three times as much as their competitors.How they emerge from the setback could set them further apart. Natixis and SocGen — minnows compared to BNP — are both working on new strategic plans to be presented next year. Oudea told analysts on Monday that he will remained focused on costs. He let one of the departing deputies explain whether the firm should keep bothering with investment banking if returns remain low. That doesn’t bode well for the division’s future. Taking outsized risks in a hugely competitive market wasn’t a winning strategy, as shareholders have learned painfully. SocGen and Natixis have little option but to keep cutting, and hope for a white knight suitor to emerge.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- BNP Paribas SA rebounded from a first-quarter profit warning and stock trading hit with a blowout performance in fixed-income that beat all but one of the large Wall Street banks.Revenue from trading fixed-income securities, currencies and commodities jumped 154% in the second quarter from a year earlier, trailing only Morgan Stanley’s 168% gain. The bank said volumes were driven by governments and corporations selling debt to deal with the coronavirus crisis, as well as foreign exchange and commodities hedging by clients.The results more than offset a 53% decline in equities trading that was worse than analysts had expected, as the bank navigated what it called a “still-challenging market” for derivatives and lower volumes in the business with hedge funds.BNP has been among banks leading a lobbying effort to resume shareholder payouts as they benefit from unprecedented market volatility and extensive government stimulus. Chief Executive Officer Jean-Laurent Bonnafe cut costs and worked to improve the trading unit over the past years, but the heavy losses at the equities business that he wants to grow were a reminder of banks’ many vulnerabilities in this crisis.Lars Machenil, BNP’s chief financial officer, said the lender will comply with a request by the European Central Bank that banks hold off on dividends and buybacks at least until the end of the year in order to preserve capital and keep lending.“Supervisory authorities extended their recommendation to not pay dividends until the end of the year, and of course we will comply,” he said in an interview on Bloomberg TV. “One assumes that when the environment doesn’t further deteriorate, this recommendation will not be extended.”BNP jumped as much as 6.3% in Paris trading and was up 2.2% as of 2:10 p.m., paring losses this year to 33%. The stock had been hit hard by the cancellation of dividends because the French firm previously made some of the biggest payouts to investors among European peers.BNP set aside 1.4 billion euros ($1.7 billion) for future loan losses in the second quarter. The lender reiterated a forecast that profit for the year could be 15% to 20% lower than in 2019.European banks in general have taken a less aggressive approach to provisions, because they’re not as profitable as their Wall Street rivals, but also because they benefit from broad government loan guarantees. UBS Group AG signaled it’s considering reviving shareholder payouts, in a sign that the worst hit on its balance sheet was over.More details from BNP’s second-quarter results:Net income EU2.3b vs Bloomberg-compiled estimate EU1.49 billionRevenue EU11.7b vs estimate EU10.9 billionCIB revenue EU4.1b vs estimate EU3.2bCommon equity Tier 1 ratio 12.4% vs estimate 11.9%Provision for loan losses EU1.4b vs estimate EU1.7 billionFICC sales & trading revenue EU2b vs estimate EU1.09bEquity trading revenue EU290m vs estimate EU485mLike its French competitors Societe Generale SA and Natixis SA, BNP suffered steep losses in the first quarter on complex equity derivatives that backfired when the market went into a tailspin and companies across the globe canceled dividends. BNP said there was “only a residual impact” in the second quarter from those cancellations.Fixed-income trading benefited from a broad-based market rally that helped U.S. peers double revenue in that business. Wall Street banks’ trading and dealmaking businesses recorded their best quarter in modern history, with $45 billion in revenue.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.