|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||22.16 - 22.58|
|52 Week Range||21.55 - 32.50|
|Beta (3Y Monthly)||0.90|
|PE Ratio (TTM)||6.55|
|Forward Dividend & Yield||1.68 (7.47%)|
|1y Target Est||24.60|
FRANKFURT/PARIS, Aug 23 (Reuters) - A deal in the works for BNP Paribas to assume the prime brokerage operations of Deutsche Bank will involve the transfer of up to 800 people, a person with knowledge of the matter said on Friday. Deutsche Bank said in July it had struck a preliminary agreement with BNP covering the business that serves hedge funds as part of its 7.4 billion euro ($8.2 billion) overhaul, but details on personnel and the timing of any final deal were being hammered out. BNP and Deutsche Bank declined to comment.
Deutsche Bank is preparing to transfer up to 800 staff to BNP Paribas as part of its retreat from investment banking, according to several people briefed on the plan. The deal will see the French lender assume control of Deutsche’s prime brokerage unit that services hedge funds, the people said, with tens of billions of euros of assets also changing hands. Last month the banks announced a preliminary agreement to “provide continuity” to Deutsche’s clients in a move that could also help BNP strengthen its presence in prime brokerage, the potentially lucrative business of lending money to hedge funds and handling their trading.
(Bloomberg) -- Huawei Technologies Co. used code names and secret subsidiaries to conduct business in Syria, Sudan and Iran, the U.S. alleged in the extradition case related to sanctions violations against the company’s chief financial officer.The Chinese networking giant allegedly operated a de facto unit called DirectPoint in Sudan and Canicula in Syria, according to documents released this week by a Canadian court. In internal spreadsheets, Huawei also used the code “A5” to refer to Sudan and “A7” to Syria, the U.S. said in the documents submitted to the Canadian government in support of its request for the extradition of company CFO Meng Wanzhou.Huawei operated those units just as it controlled a subsidiary in Iran that obtained American goods, technologies and services in violation of U.S. sanctions, according to the allegations.The U.S. is seeking to extradite Meng -- daughter of Huawei’s billionaire founder Ren Zhengfei -- after accusing her and others at the company of conspiring to trick banks into conducting more than $100 million worth of transactions that may have violated U.S. sanctions. The company has denied it committed any violations. It didn’t respond Wednesday to requests for comment on the allegations in the court documents.“The motivation for these misrepresentations stemmed from Huawei’s need to move money out of countries that are subject to U.S. or EU sanctions -- such as Iran, Syria, or Sudan -- through the international banking system,” the Justice Department said in its request for Canada to arrest Meng as she arrived at Vancouver’s airport last December.The court on Tuesday released hundreds of pages of documents and video footage submitted by Meng’s defense to back its arguments that Canadian authorities deceived her about the true nature of her detention in order to collect evidence for the U.S. FBI.In those documents, the U.S. outlined its case against Meng and its plans for witnesses in the case against her if she is successfully extradited. Among those witness are unnamed executives from HSBC Holdings Plc, Standard Chartered Plc, BNP Paribas SA and Citigroup Inc. that allegedly were misled by Meng and her colleagues into continuing business with Huawei at the time despite the risk of sanctions violations.To contact the reporter on this story: Natalie Obiko Pearson in Vancouver at email@example.comTo contact the editors responsible for this story: David Scanlan at firstname.lastname@example.org, Andrew Pollack, Peter BlumbergFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
U.S.-based Citigroup Inc and French bank BNP Paribas are caught up in the U.S. criminal case against the chief financial officer of China's Huawei Technologies, according to newly available documents. The banks were named in documents released on Tuesday after a hearing in British Columbia Supreme Court, where Huawei CFO Meng Wanzhou is fighting extradition to the United States on bank fraud charges. The two are among at least four financial institutions that had banking relationships with Huawei when Meng and others allegedly misled them about its business dealings in Iran despite U.S. sanctions.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.The world’s first 30-year bond featuring zero income struggled to find buyers, prompting Germany’s debt agency to admit the sale may have been “too large.”The nation failed to meet a 2-billion-euro target ($2.2 billion) for the auction of notes maturing in 2050, signaling that negative yields across Europe may finally be taking their toll on demand. It’s another sign that the global bond rally may be coming to a halt now that more than $16 trillion of securities have negative yields.“The broader conclusion is that this is an ominous sign for cash bonds,” said Antoine Bouvet, a rates strategist at ING Groep NV, looking ahead to the end of a summer lull in European issuance next month. The jury is still out on whether this is “a turning point in the long-end rates rally, as the fundamental driver of lack of faith in central banks’ ability to reflate the economy is still there.”Dwindling expectations for inflation and growth in coming years has led the European Central Bank to hint at a new wave of monetary stimulus next month, driving a rally across the region’s bond markets. The whole of Germany’s yield curve is now below zero -- among the first major markets exhibiting such a trait -- meaning the government is effectively being paid to borrow out to 30 years.That drew the attention of U.S. President Donald Trump, who used it to launch another push on Twitter for the Federal Reserve to lower U.S. borrowing costs. Markets are waiting for comments by Fed Chair Jerome Powell and other central bankers meeting from Friday to discuss stimulus for the global economy at a gathering in Jackson Hole, Wyoming.The German sale comes as Europe’s largest economy is priming the pumps for extra spending in the event of a crisis. While the nation is confined to strict laws on running a fiscal deficit, Finance Minister Olaf Scholz suggested Germany could muster 50 billion euros ($55 billion) should a recession hit. The economy contracted in the second quarter.The country only sold 824 million euros of the zero coupon bond at a record-low average yield of -0.11%, while the Bundesbank retained nearly two-thirds of the debt on offer. The real subscription rate -- a gauge of demand that accounts for retentions by the Bundesbank -- fell to 0.43 times against 0.86 times at the previous sale of similar maturity bonds on July 17.“This shows that there is less demand for 30-year bonds at negative yields,” said Marco Meijer, a senior fixed-income strategist at BNP Paribas SA. Still, Meijer doesn’t “see yields rising a lot in Europe.”Germany’s debt agency said it was aware that the auction with a zero coupon might fail to drum up large investor interest.“In the current environment it is difficult to issue in large volume a bond of this maturity,” said spokeswoman Alexandra Beust in Frankfurt. The agency “doesn’t view the sale as a failure -- it doesn’t cause us a problem as we can take the remainder on our own books.”Tantrum RiskGerman 30-year bonds erased declines after the comments, with yields steady at -0.15% after having risen three basis points earlier in the day. Those on 10-year securities also steadied at -0.69%, near a record low touched earlier this month.One of the triggers for a German bond selloff in 2015, after benchmark yields first neared 0%, was a poor 10-year auction that highlighted a loss of demand at low yield levels.This time around, Commerzbank AG had expected demand to come from life insurers and macro investors, despite the yield curve flattening in recent weeks to drive down long-dated yields. German 30-year bonds are still attractive for U.S. investors, when hedged for currency swings, offering around a 2.6% yield, relative to around 2% on a 30-year Treasury.“It is technically a failed auction,” said Jens Peter Sorensen, chief analyst at Danske Bank AS. “I am not all worried about this -- as investors can always just buy in the future and do not need to participate in auctions.”(Updates with German debt agency comments.)\--With assistance from James Hirai, Charlotte Ryan and Brian Parkin.To contact the reporter on this story: John Ainger in London at email@example.comTo contact the editors responsible for this story: Ven Ram at firstname.lastname@example.org, Neil ChatterjeeFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- An Indian startup that aims to use artificial intelligence to deliver faster and more personalized customer support for corporate clients is raising $51 million in funding from investors including March Capital Partners and Chiratae Ventures.Uniphore Software Systems Pvt, based in Chennai and Palo Alto, Calif., plans to use the emerging technology to change the labor-intensive business of call centers, displacing workers with machines. Former Cisco Systems Inc. Chief Executive Officer John Chambers’ JC2 Ventures owns about 10% of the startup. Existing backers also include Analog Devices Inc. founder Ray Stata and Infosys Ltd. billionaire co-founder Kris Gopalakrishnan.Umesh Sachdev, 33, founded the company in 2008 with his engineering classmate Ravi Saraogi. They are competing with technology giants like Google, Microsoft Corp. and International Business Machines Corp. as well as at least a dozen AI startups to automate the $350 billion call center industry, helping agents deliver more useful support while decreasing the number of infuriating and ineffectual experiences.“This is one of the largest rounds in an area of deep tech already seeing a lot of investor activity,” CEO Sachdev said in a telephone interview. “It represents the coming of age of conversational AI.”He declined to reveal the startup’s valuation, but said it is “one step away from turning into a unicorn,” the tech industry’s term for a value of $1 billion or more.Voice bots and automated messaging systems are already changing the world of call centers, and experts reckon the majority of human workers will be driven to obsolescence by artificial intelligence. By 2021, about 70% of organizations will integrate AI to assist employee productivity, researcher Gartner Inc forecast earlier this year.Using messaging apps, chatbots and speech-based assistants, so-called conversational artificial intelligence automates communication and delivers personalized experiences. “Virtual agents are gaining ubiquity via smartphones and messaging platforms to support customer care, marketing and employee efficiency,” said Dan Miller, the lead analyst with Saint Paul, Minnesota-based Opus Research.Sachdev estimates that the U.S. alone has 3.9 million call center workers and those numbers will steadily diminish as companies adopt new technologies. “Humans will shift from taking mundane calls to enhancing knowledge and teaching AI what is the good answer and how to resolve issues,” he said.Uniphore will use the funds to hire talent, invest in research and development and accelerate expansion, particularly in its primary market in North America. The startup plans to increase its engineering and development operations to 200 employees in India by the year end, while another 60 will be based in the U.S. and 40 in Europe and Asia Pacific. Its customers include BNP Paribas SA, Genpact Ltd., NTT Data Corp., and PNB MetLife.“Indian entrepreneurs are going from slow-followers to fast-innovators,” said Chambers in an interview earlier this year, explaining why he’s backing Uniphore. “I see a young breed of founders who are hungry for a piece of the future.”To contact the reporter on this story: Saritha Rai in Bangalore at email@example.comTo contact the editors responsible for this story: Peter Elstrom at firstname.lastname@example.org, Edwin ChanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Phone carriers are huge energy users, and need to cut emissions. They also face massive bills to build out the next generation of wireless networks. Green bonds promise to help them with both.A steady flow of issuance could be building: Orange SA and BT Group Plc are poised to follow Telefonica SA and Verizon Communications Inc. in selling securities designed to fund environmentally friendly projects. The industry has already completed at least $3 billion of sales since January, its first steps into a sustainable debt market that Bloomberg New Energy Finance estimates could exceed $370 billion this year.The proceeds can help telecom companies replace power-hungry copper wires with fiber-optic cables, or build the 5G networks that promise to make cities, homes and factories more efficient. There’s plenty of investor appetite for this new take on sustainable investing, but there’s a catch: any hint that a bond doesn’t genuinely help the planet can cause some buyers to flee.“Telecoms have to invest a lot. In the long run, having green bonds in place is going to be very important,’’ said Juuso Rantala, who holds Telefonica’s green bond in the 400 million-euro ($449 million) fund he manages at Aktia Asset Management Ltd. in Finland. “If I find out that I cannot trust the company in the case of green bonds, I cannot trust them in many other ways too. If I cannot trust them, I don’t invest.’’The securities show how green debt is expanding beyond its original universe of the clean energy industry. Beef supplier Marfrig Global Foods SA and Australian retailer Woolworths Group Ltd. have tapped this market to help their operations become more environmentally friendly.For carriers, the task is urgent. The communications industry accounts for about 10% of global electricity demand, and that could exceed 20% by 2030 as demand for data balloons, according to Huawei Technologies Co.Telecom companies have ways to clean up their act. For example, replacing copper with glass wires would use 85% less energy, according to Telefonica. And 5G can enable a range of environmental benefits by allowing smart buildings to monitor heating, connected warehouses to optimize their logistics and power grids to better allocate electricity.But these companies are already staggering under a mountain of debt from, among other things, buying 5G licenses. They’ll need to make sure they can keep their borrowing costs low and tap investors when needed.That’s where green bonds can help: the interest costs are about the same as on these companies’ conventional securities, but they offer the opportunity to access a wider pool of investors.The share of funds focused on socially responsible investing, which includes environmental projects, has risen 34% over the last two years, and now accounts for $30.7 trillion of assets globally, according to the investor group Global Sustainable Investment Alliance.“Many more green telco bonds are likely,” Morgan Stanley analysts led by Emmet Kelly wrote in June. “Demand from funds that have incorporated sustainability into their investment framework has been key.’’Telefonica, based in Madrid, is a good example. Demand for the issue, which priced in January, was significant: the company received five times the orders than what was available for sale, and obtained a spread more than the mid-swap rate that was about 25 basis points lower than initial indications.The yield on the 1 billion-euro 5-year security is in line with the rest of its curve, Bloomberg data show, indicating it didn’t have to pay a premium to tap demand for sustainable credit. It’s a similar story for Verizon and Vodafone Group Plc.Orange and BT Group are paying attention -- they have inserted clauses into their Eurobond prospectuses which would let them issue green bonds in the near future. And Deutsche Telekom AG is monitoring the surging market closely, said a spokesman.For investors, the risks go beyond what’s expected for any fixed-income asset. Buyers also have consider just how green these bonds are.“The question is whether or not a bond offers a real energy efficiency gain or overall gain for the environment,’’ said Arnaud-Guilhem Lamy, who holds telecom securities in his 340 million-euro ($381 million) green bond fund at BNP Paribas Asset Management in Paris. “If we think it’s insufficient, we would sell.’’For a start, there’s always the possibility that this new breed of green-bond borrowers divert proceeds to inappropriate purposes, including pooling them into general funds. Though monitoring groups such as credit rating firms can discourage such behavior, it’s something investors need to watch.But 5G presents a particular environmental paradox.Internet-of-things technologies will connect billions more devices and require many more antennas, so 5G will initially use more power than 4G, according to Sustainalytics, an independent corporate sustainability research firm. This complicates the idea that 5G can be a green investment.However, Sustainalytics estimates the energy savings from 5G outweigh the extra emissions to deploy the new tech by a ratio of 5 to 1. The firm’s analysis of the Verizon bond issue, which included 5G deployment among the potential use of proceeds, found that it was a credible candidate for green financing.It’s a good thing, because Verizon plans on returning to this corner of the bond market. It looks like it will be welcome, too – its $1 billion issue of 10-year green debt was eight times oversubscribed within six hours of being offered for sale, said Jim Gowen, head of supply chain and sustainability for the U.S. carrier.“It was far beyond our wildest expectations,” Gowen said. “We are very interested in doing another one.’’\--With assistance from Paul Cohen and Lyubov Pronina.To contact the reporter on this story: Thomas Seal in London at email@example.comTo contact the editors responsible for this story: Rebecca Penty at firstname.lastname@example.org, Jennifer RyanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Oil surged the most in nearly a month as investors digested Saudi Arabia’s latest plan to help stabilize prices following a large dip earlier in the week that was fueled by demand concerns.WTI advanced 3.7% in New York on Friday, paring its weekly loss to 2.1%. Escalating tensions between China and the United States along with a surprise gain in U.S. stockpiles pushed prices to a seven-month low during the week. Yet, Saudi Arabia retaliated to the rout with a plan to limit output and exports in September, a move that seemed to placate the market.Oil was "vulnerable for a correction,” said Gene McGillian, a senior analyst and broker at Tradition Energy in Connecticut. "Right now, the Saudis’ willingness to take steps has kind of stemmed the market slide. The question is how much can that rally work without other producers stepping up as well? Given this trading environment, these kind of big price swings are more expected than not.”Saudi Arabia, the top producer in the Organization of Petroleum Exporting Countries, plans to keep oil exports below 7 million barrels a day next month as it allocates less crude than customers demand, according to unnamed officials from the kingdom. State-run Saudi Aramco will provide customers across all regions with 700,000 barrels a day less than they requested, the officials added.A large-volume bullish options trade was also reported just after 9 a.m. in New York, for 25,500 contracts -- equivalent to 25.5 million barrels of oil. The buyer of the options would profit from a tighter supply and demand outlook for WTI at the end of the year, helping to push oil prices higher.Listen to this mini-podcast for the latest on the Permian BasinWest Texas Intermediate crude for September delivery advanced $1.96 to settle at $54.50 a barrel on the New York Mercantile Exchange, the biggest increase since July 10.Meanwhile, WTI is edging closer to its 50-day moving average, which it has held below since the beginning of the month.Brent for October settlement rose $1.15 to end the session at $58.53 a barrel on the ICE Futures Europe Exchange. The global benchmark crude traded at a $4.16 premium to WTI for the same month, the smallest discount in more than a year.Despite the daily advance, it’s hard to ignore crude’s plummet this week due to growing fears that the trade spat between the U.S. and China will expand into a currency war. Meanwhile, the International Energy Agency trimmed forecasts for oil-demand growth this year and next, and called the demand outlook “fragile” in a report Friday.Russia’s Energy Ministry said the the outlook for global oil demand that the IEA forecast confirms the need for OPEC+ cooperation."Demand concerns are overshadowing everything else," said John Kilduff, partner at Again Capital LLC. "The trade war is only worsening; it’s escalated significantly over the past few weeks."\--With assistance from Alex Longley, Grant Smith, Tsuyoshi Inajima and Alex Nussbaum.To contact the reporter on this story: Kiran Dhillon in New York at email@example.comTo contact the editors responsible for this story: James Herron at firstname.lastname@example.org, Jessica Summers, Mike JeffersFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- The pound has set a new post-Brexit referendum low against the euro and is tantalizingly close to doing the same against the dollar. This slide says more about the increasing likelihood of a no-deal departure than the state of the U.K. economy.Figures released on Friday showed gross domestic product shrank by 0.2% in the second quarter, the first negative reading since 2012. Much of this is attributable to companies unwinding their stockpiles of inventory ahead of the initial March deadline for leaving the European Union. That date has now slipped to Oct. 31.In fact, the U.K. economy is holding up pretty well, with both government and household spending remaining robust. The third quarter should see a bounce back of 0.3%, according to Bloomberg Economics's Dan Hanson. His forecasts for growth in 2019 are unchanged.Sterling’s weakness has been far more closely linked to the prospects of a no-deal Brexit. Boris Johnson's administration has ramped up both its rhetoric and preparations for that outcome – but its majority in parliament is looking increasing doubtful and an early election thus more likely. That has prompted currency traders to raise their expectations that the U.K. and EU will fail to reach a deal in time. Analysts at BNP Paribas SA now put the probability at 50%, up from 40%.Another factor in all this is that Sajid Javid, the new Chancellor of the Exchequer, announced a shorter, sharper review of government spending on Friday, rather than the typical three-year review. This suggests election planning is in full swing. Add in Johnson’s big spending promises on health, and it is highly likely that more gilts will have to be issued. Such fiscal relaxation is a negative for sterling, even if the gilt market remains impervious for now.There is simply very little to support the pound regardless of how undervalued it may be. With previous lows breached, it is hard not to expect further weakness until the political landscape becomes clearer.To contact the author of this story: Marcus Ashworth at email@example.comTo contact the editor responsible for this story: Edward Evans at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
BNP Paribas on Friday raised the probability of the United Kingdom's exit from the European Union without a deal to 50% from 40%, pointing to a volatile political environment and tight timetable. The United Kingdom is due to leave the European Union on Oct. 31, but the burgeoning effects of Brexit have had a strong impact on the economy, which shrank unexpectedly in the second-quarter for the first time since 2012. "With Parliament in recess, the rhetoric is very much in one direction, with no effective counter-balance in the form of MPs actively trying to prevent a disorderly outcome," the bank's research team led by Paul Hollingsworth said in a note.
(Bloomberg) -- Europe’s battered investment banks held their own in a quarter marked by challenging conditions, stopping a long slide in market share that has prompted painful adjustments across the continent.Even with Deutsche Bank AG slashing its trading units and HSBC Holdings Plc being thrust into turmoil, European trading desks managed to eke out a small gain over their Wall Street peers in the second quarter. U.S. firms led by Goldman Sachs Group Inc. did better in trading equities and related securities, while Europeans led by Credit Suisse Group AG and BNP Paribas SA posted stronger income from buying and selling fixed-income instruments.Here’s a look at how the biggest investment banks did in the second quarter, in four charts.Deutsche Bank led declines in overall trading as the German lender pushed through its biggest overhaul in recent memory, but HSBC was a close second. The British lender on Monday ousted Chief Executive Officer John Flint after less than two years, surprising even some executives at the London firm. Among the U.S. banks, Morgan Stanley reported the steepest declines as hedge fund clients pulled back. All told, Europe’s trading desks saw revenue drop about 7%, compared with a roughly 8% decline on Wall Street.Europe’s banks did relatively well in fixed income, currencies and commodities, known as FICC. BNP Paribas posted a 9% gain, leading a small group of European firms that bucked the broader downward trend. Banks such as Credit Suisse and Natixis SA cited strong performance in credit trading. Barclays Plc finance director Tushar Morzaria said he was optimistic on the basis of some “very large movements" across asset classes.In the U.S., fixed-income traders struggled. Morgan Stanley led a broader slump, citing the “effects of a decline in interest rates and lower volatility.” The trend was echoed by larger rivals including JPMorgan Chase & Co. and Citigroup Inc. Top Wall Street executives embraced a sports cliche to describe cautious clients that led to their worst first-half for trading in a decade: “on the sidelines.”Equities trading was one area where the U.S. stood out, with Goldman Sachs posting a 6% gain for the second-highest quarterly revenue from that business in four years. Only Credit Suisse managed to increase earnings from stock trading, despite a drop at its Asian unit.Deutsche Bank posted the biggest decline here, after announcing during the quarter that it would largely exit the equities business, a dramatic overhaul it said was reflected in its results. Natixis reported a 19% drop, another blow for the French brokerage that lost almost $300 million on Korean derivatives late last year. Morgan Stanley, Wall Street’s biggest stock brokerage, Citigroup and BNP all cited a decline in hedge-fund activity while Bank of America Corp. blamed a “weaker performance” in equity derivatives in Europe.Fees from advising clients on mergers and acquisitions or arranging their stock and bond sales didn’t offer much succor for global banks in the second quarter apart from UBS Group AG. The Zurich-based lender claimed “outperformance” as it advised on large global deals including the spinoff of contact lens maker Alcon Inc. from Novartis AG. By contrast, hometown rival Credit Suisse reported that “a number of transactions did not materialize in the quarter,” helping produce a 14% decline. Other rivals posted dips in revenue from managing debt sales.To contact the reporter on this story: Donal Griffin in London at email@example.comTo contact the editors responsible for this story: Ambereen Choudhury at firstname.lastname@example.org, Christian Baumgaertel, Keith CampbellFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- More than four years after the oil-price crash, Gulf Arab policy makers can finally count on support from the Federal Reserve to add fuel to their fragile economic recovery.Central banks in Saudi Arabia, the United Arab Emirates, Qatar and Bahrain cut their benchmark interest rates by 25 basis points following a similar decision by the Fed on Wednesday. Kuwait kept its discount rate unchanged at 3%.Gulf central banks largely move in lockstep with the U.S. to protect their currencies’ peg to the dollar. But as the Fed raised rates nine times since 2015, they were unable to lower borrowing costs to help weather the effect of lower oil prices on their economies.The Gulf will “go with the flow,” BNP Paribas SA economists Marcelo Carvalho and Luiz Eduardo Peixoto said in a report. “We foresee rate cuts synchronized with the Fed in most places, including Saudi Arabia, the U.A.E., Bahrain and Oman.”Kuwait’s central bank, which maintains a peg to a basket of currencies, said it skipped lowering rates to balance between the need to promote economic growth and ensure the dinar remains attractive for savings. Kuwait raised its key rate only four times since 2015.(Updates with economist comment in fourth paragraph.)\--With assistance from Simone Foxman.To contact the reporter on this story: Vivian Nereim in Riyadh at email@example.comTo contact the editors responsible for this story: Lin Noueihed at firstname.lastname@example.org, Alaa Shahine, Paul AbelskyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- It’s rare to be able to say that a Japanese bank is getting something right. It’s even rarer when the institution in question is Nomura Holdings Inc.The jump in trading revenue that drove Nomura’s first profit increase in six quarters contrasts with declines at Wall Street rivals, which have struggled with their fixed-income businesses amid persistent low interest rates since the global financial crisis more than a decade ago. Japan’s biggest brokerage was profitable in all three of its overseas markets – Europe, Asia outside Japan, and the U.S. – in a sign that repeated waves of cost-cutting are finally bearing fruit.That offers some respite for Chief Executive Officer Koji Nagai, who won reappointment to the board last month by the narrowest margin of his seven-year reign. Scrutiny of Nagai has intensified after Nomura’s first fiscal-year loss in a decade and an information leak at a research affiliate led to regulatory penalties. The brokerage’s shares rose as much as 9.8% on Thursday morning in Tokyo.Nomura said it’s halfway through plans announced in April to slash $1 billion of costs. These have fallen heavily on Europe, with Nagai at the same time beefing up Nomura’s operations in the U.S. The June quarter results vindicated that strategy, as U.S. mortgage bond trading picked up. The brokerage has cut 629 employees since June last year, 255 of them in Europe.The contrast with Wall Street is stark. Trading revenue at the five biggest U.S. investment banks, including JPMorgan Chase & Co., dropped 8% in the April-June quarter, following a 14% slide in the first three months. European rivals have done better: An upturn in bond trading helped spur improved results at Credit Suisse Group AG and BNP Paribas SA this week.Some caution is warranted. This quarter was free of legal issues that beset Nomura in the year-earlier period, flattering the comparison. And crucially, its home market shows few signs of improving. Japanese investors aren’t trading much, with the firm’s brokerage fees and commissions dropping 14% in the three months through June. Daiwa Securities Group Inc., with a smaller overseas business, posted a 13% drop in fiscal first-quarter profit.Nomura also faces a looming demographic challenge. Its high-net worth client base, while Japan’s most affluent, is also probably also the oldest, according to Morningstar analyst Michael Makdad. Nagai’s challenge will to be to draw in younger customers while keeping free of scandals such as last month’s Nomura Research Institute leak, which cost the firm many big deals.For now, though, the brokerage at least looks to be on the right track. To contact the author of this story: Nisha Gopalan at email@example.comTo contact the editor responsible for this story: Matthew Brooker at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Traders at Credit Suisse Group AG and BNP Paribas SA broke some of the gloom in European banking, beating most of their Wall Street peers in the second quarter.The results represent a rare bright spot for institutions contending with a deteriorating economy and huge job cuts, including the 18,000 positions that Deutsche Bank AG expects to eliminate as it exits its equities business.“The weakness in the European banking sector does not apply to all financial institutions,” said Andreas Meyer, a portfolio manager at Aramea Asset Management AG. “The French and Swiss banks are able to produce good results again.”Credit Suisse posted a 6% gain in fixed income and only a slight decline in equity revenue. In contrast, the biggest Wall Street firms recorded a 7% drop in fixed income and an 8% slide in equities, capping what’s shaping up to be the worst first half for securities trading in a decade.Debt TradingBNP Paribas, the second biggest lender in the euro zone by market value, saw debt trading rise almost 9%, extending a surge in the first three months of the year.The French bank’s global markets unit -- its key trading division -- saw revenue decline by almost 3%, dragged down by a 14% drop in equity and prime services. While that was worse than most Wall Street peers, some analysts had expected BNP to post a drop of about a quarter. The bank had a particularly difficult end to last year when it lost about $80 million on derivatives trades linked to the U.S. stock market. It’s now seeking to take over some Deutsche Bank’s business with hedge-fund clients.Shares RiseShares of both lenders rose, with BNP adding 3.3% at 2:06 p.m. in Paris trading and Credit Suisse jumping 4.3% in Zurich.The trading results at Credit Suisse add to evidence that the bank has turned a corner at its global markets division -- which had a reputation for surprising investors with losses -- after emerging from its three-year turnaround, though trading at the bank’s Asian unit slumped.Equities trading fell about 1%, head of investor relations Adam Gishen told reporters on a conference call. The bank, which has two separate trading businesses, didn’t publish year-on-year changes for group-wide equities or fixed income trading in its earnings materials, in contrast with its large rivals.The lender had healthy inflows of 9.5 billion francs ($9.6 billion) in wealth management, compared with outflows at rival UBS Group AG.Rate ‘Challenge’Both BNP and Credit Suisse have held off on the sort of drastic job cuts announced this year by competitors including Deutsche Bank and Societe Generale SA. Credit Suisse said it saw “healthy levels of client engagement” so far this quarter, contrasting with warnings from peers that clients were staying on the sidelines and lower rates would hurt income from lending.Still, there are plenty of challenges ahead with the Federal Reserve and the European Central Bank preparing further interest rate cuts to stimulate the economy.“Negative interest rates are a challenge,” Credit Suisse Chief Executive Officer Tidjane Thiam said in an interview with Bloomberg TV’s Francine Lacqua.While the bank is less dependent on income from lending than some peers, its domestic business remains exposed. Credit Suisse will announce some measures in August to change pricing and protect income from lending, Thiam said.The trading gains weren’t just restricted to the two large European banks. Japan’s Nomura Holdings Inc. saw net revenue for global markets rise 21% from a year earlier, spurred by the highest amount generated from fixed-income in the U.S. in 10 quarters. Mitsubishi UFJ Financial Group Inc.’s first-quarter profit jumped as gains from securities trading offset a decline in lending income.(Adds trading gains at Japanese banks.)\--With assistance from Steven Arons, Donal Griffin and Jan-Patrick Barnert.To contact the reporters on this story: Patrick Winters in Zurich at email@example.com;Nicholas Comfort in Frankfurt at firstname.lastname@example.orgTo contact the editors responsible for this story: Dale Crofts at email@example.com, James HertlingFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Wall Street’s worst first half in more than a decade for trading is turning out to be surprisingly less painful for some European firms: Credit Suisse Group AG and BNP Paribas SA managed to claw back some of the market share they had previously lost. But counting on a continued rebound could be a mistake.On Wednesday, Switzerland’s second-biggest bank reported a 7% increase in second-quarter fixed income revenue, against a decline of the same magnitude among its U.S. peers. Income from trading stocks was flat across the firm, but compared favorably with the 8% drop posted by its rivals across the Atlantic.This isn’t quite a vindication of Chief Executive Officer Tidjane Thiam’s three-year effort to pivot the bank away from the volatile trading business to the more stable world of managing wealthy clients’ money. It is still far from certain how sustainable the uptick in trading will be.In equities, a business that analysts estimate was unprofitable as recently as last year, Thiam said he is confident Credit Suisse has been catching up with the top five players as it attracts balances from big hedge funds. This matters because only the biggest are likely to generate a profit from that business.But in May, the firm replaced the head of the unit, Mike Stewart, who had been charged with turning around the operation when he was hired in 2017. The impact of the recent management changes remains to be seen.The outlook also remains “very difficult” in Asia, Thiam acknowledged. There, fixed income revenue slumped 29% in the three months through June. What’s more, an over-reliance on bonds across the firm may not help if the fixed-income market turns after an exceptional first half.Then there is the mysterious contribution of the International Trading Solutions unit, or ITS. A joint venture between Credit Suisse’s wealth management, markets and Swiss units, the bank hailed ITS as a big driver of income in the first quarter – even if it didn’t provide specific figures.Asked how the business helped markets in the second quarter, Thiam said it was “one of the components in equities.” The only references to ITS in the financial report point to a decline in both quarter-on-quarter and year-on-year revenue. As I’ve said before, more transparency on the lumpy trades it generates is essential.Credit Suisse’s rival BNP also defied expectations with an 8% bounce in bond and currency trading revenue. The figure for equities was down 14% on an exceptionally strong year-earlier period.With the outlook for revenue deteriorating last year, the French firm accelerated a plan to reorganize its investment bank and focus on high-volume electronic business and select bespoke deals with fatter margins. The gains this year amid lower volatility in foreign exchange suggest the shift is paying off, but there may not be much upside left.Neither Credit Suisse nor BNP would comment directly on the competition, but both are probably benefiting from the retreat of European rivals. Deutsche Bank AG is giving up on equities trading and Societe Generale SA is scaling back in rates, currencies and prime services. BNP is, for example, preparing to ramp up its services for hedge funds by taking on Deutsche Bank’s clients and platforms.Whether both firms are able to rebuild and keep growing their franchises beyond these recent readjustments is still far from certain.To contact the author of this story: Elisa Martinuzzi at firstname.lastname@example.orgTo contact the editor responsible for this story: Edward Evans at email@example.comThis 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/opinion©2019 Bloomberg L.P.
(Bloomberg) -- BNP Paribas SA posted a second straight gain at its fixed-income trading business, outshining Wall Street and European peers in what’s shaping up to be the worst first half for securities trading in a decade.Debt trading revenue rose almost 9% to 793 million euros ($884 million) in the three months through June, beating competitors including JPMorgan Chase & Co. and Citigroup Inc. though falling short of a 29% rebound in the first quarter. Equities trading also did better than expected.Chief Executive Officer Jean-Laurent Bonnafe has closed units and vowed to slash costs after tough trading conditions complicated his plans to create a European champion better able to compete with U.S. banks. BNP has shut a proprietary trading unit and commodity derivatives activities to curb risk while seeking to take advantage of Deutsche Bank AG’s retreat from equities and prime services.BNP rose as much as 3.5% in early Paris trading and gained 3.2% as of 9:02 a.m. local time.BNP’s global markets unit -- its key trading division -- saw revenue decline by almost 3%, dragged down by the 14% drop in equity and prime services. While that was worse than most Wall Street peers, some analysts had expected BNP to post a drop of about a quarter in equities. Still, both global markets and FICC results would have been higher excluding the effect of the creation of a new capital markets platform.Bonnafe cut 2020 earnings targets in February and announced an additional 600 million euros in cost cuts to weather a trading slump. The bank is targeting about 3.3 billion euros of expense reductions by 2020. That followed a particularly difficult end to the year when it lost about $80 million on derivatives trades linked to the U.S. stock market.Last year, BNP was caught on the wrong side of a sell off in developing-market assets and blindsided by the Turkish currency crisis. The second quarter was marked by growth in foreign exchange and credit, despite the more challenging context for rates, especially in Europe, the bank said.Stayed ClearThe French bank has so far stayed clear of suggesting any big job-cutting plans like those at cross-town rival Societe Generale SA or the 18,000-headcount reduction that Deutsche Bank kicked off earlier this month. BNP is about half way through its 2020 cost plan, having achieved about 1.5 billion euros of cost savings, and has outsourced equity research in Asia to Morningstar.BNP “started to see the benefits,” of restructuring in corporate and institutional banking, Chief Financial Officer Lars Machenil said in a Bloomberg Television interview. “In fixed income we saw already a strong pickup and contribution in the first quarter that was confirmed in the second quarter,” he said.BNP Paribas is targeting its spending to win clients in countries such as the U.S., the U.K. and especially Deutsche Bank’s backyard. Germany’s mass of small and medium-sized companies have traditionally been the backbone of its export-oriented powerhouse economy, yet international trade disputes have taken their toll on the outlook for the country.Bankers across the globe have warned in recent weeks that the prospect of lower interest rates to stimulate economies will hurt their revenue. Given its geographical focus, BNP is exposed to negative rates at the European Central Bank, which charges banks to deposit funds overnight rather than lend them out.(Adds shares in 4th paragraph.)To contact the reporter on this story: Nicholas Comfort in Frankfurt at firstname.lastname@example.orgTo contact the editors responsible for this story: Dale Crofts at email@example.com, Ross LarsenFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
PARIS , July 31, 2019 /PRNewswire/ -- BNP Paribas, one of Europe's largest banks, reports 2019 second quarter results. CEO Jean-Laurent Bonnafé comments on the Group's results. Watch video interview and ...
(Bloomberg Opinion) -- As the prospect of Britain leaving the European Union without a deal grows ever more likely, the City of London’s status as the center of European finance is in increasing jeopardy. The Square Mile is also missing out on the chance to lead the charge into one of the hottest new products in finance, in part because of the government’s reluctance to participate in the mini-revolution.By the beginning of this month, more than $100 billion of green bonds had been sold globally, up from $70 billion at the same point last year and on pace to top last year’s record $134 billion of issuance. While the sector is still small in comparison with the $2.6 trillion of international bonds issued this year, it has doubled in size in just two years — and with the climate crisis becoming more apparent with every temperature record that gets broken, its future trajectory is clear. Countries including Chile, Poland and the Netherlands have all sold debt designed to finance environmentally friendly projects. France has been at the forefront of developing the market for green bonds issued by governments; as a result, its banks are at the top of the global league tables for underwriting sales of this kind of debt for both nations and companies. Credit Agricole SA, BNP Paribas SA and Societe Generale SA enjoy a combined market share of almost 15%.The U.K.’s sole representative in the top 10 rankings is HSBC Holdings Plc — which has seriously considered shifting its head office to Asia, where it makes most of its revenue. That’s a sorry state of affairs given London’s record of being at the vanguard of developing new financial products. And that poor showing is because the U.K. is notably absent from the list of governments that have issued the bonds.The Debt Management Office, which is responsible for U.K. gilt sales, referred me to the government’s Green Finance Strategy report published earlier this month. While that report acknowledges the importance of the continued “mainstreaming of green finance products,” it dismisses the idea of a sovereign issue:The Government does not consider a sovereign green bond to be value for money compared to the core gilt program, which remains the most stable and cost-effective way of raising finance to fund day-to-day government activities.The Government remains open to the introduction of new debt financing instruments but would need to be satisfied that any new instrument would meet value for money criteria, enjoy strong and sustained demand in the long-term and be consistent with the wider fiscal objectives of government.That reluctance strikes me as shortsighted. Admittedly, the Dutch government’s 6 billion euros ($6.7 billion) of 20-year green bonds sold in May yield more than a slightly longer-dated 22-year vanilla issue. But the average gap of fewer than 5 basis points in the past two months is negligible.Moreover, given that the U.K. report also talks about the need for Britain “to consolidate its reputation as the home of the green finance professional and to capture the commercial opportunities” from the growth of the global market for environmentally friendly securities, a tiny increase in interest payments seems — literally — a small price to pay. Back in the day, it was the U.K. and the Bank of England that took the lead in transformative financial innovations. Bankers in London invented the Eurobond market, which became one of the primary sources of finance for companies and governments worldwide. The now discredited London interbank offered rates were the most important benchmarks of borrowing costs.When it became clear that Europe was serious about introducing a common currency, it was the U.K. central bank that did much of the groundwork. Back in 1991, Britain issued the biggest benchmark bond denominated in European currency units, the euro’s forerunner, as a way of cementing London’s role in the development of the new currency — a victory that still rankles with Paris.And half a decade ago, the U.K. was determined to become the first nation other than China to sell a bond denominated in renminbi as financial centers vied to become the offshore trading hub for Beijing’s currency. Those yuan bonds were repaid almost two years ago.Prior to entering Parliament, the newly installed chancellor of the exchequer, Sajid Javid, was a managing director at Deutsche Bank AG. So he, of all politicians, should appreciate that the City needs to grasp any and every opportunity to position itself for a post-Brexit world. Prime Minister Boris Johnson should allow him to instruct the DMO to embrace green bonds as a relatively cheap way to put London in the mix — and the sooner, the better.To contact the author of this story: Mark Gilbert at firstname.lastname@example.orgTo contact the editor responsible for this story: Edward Evans at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.