BNP Paribas eyes Asia as key prime brokerage market
BNP Paribas plans a full roll-out of its global prime brokerage platform in Asia, where the Paris-based bank is building a regional team that will include capital introduction staff.
The platform, formally launched last week, will leverage the Paris-based bank’s global clearing and custody services network to service hedge funds. It will also offer margin financing, securities lending, capital introduction, and real-time profit and loss data.
"Our development plans for the prime brokerage platform are global, and certainly Asia will be a key part of the strategy,” says Hong Kong-based Benjamin Dufour, BNP Paribas managing director and head of equity financing, Pan-Asia, for global equities and commodity derivatives.
BNP Paribas, which has 350 staff worldwide for its prime brokerage business, declined to say how many employees are based in Asia. However, the bank confirmed that teams would be expanded, particularly in Europe and Asia.
Dufour notes that capital introduction, which he describes as a key component of the firm's offering in the US, "is being deployed globally and, in particular, in Asia".
BNP Paribas acquired Bank of America's equity prime brokerage in June 2008 for a reported $300 million and has since been extending the platform. In November that year it won a prime brokerage mandate from London-based CQS, an $11 billion hedge fund manager which runs about $170 million through the CQS Asia Fund and operates a Hong Kong office.
A few years prior to the BoA deal, BNP Paribas had started offering niche prime brokerage services specialising in derivatives products. While the acquisition provided the bank with a sizable US prime brokerage client base, it had to build a singular global platform through which it would support its existing clients and also service new mandates.
It is thought that BNP Paribas will target larger hedge funds with at least $100 million in AUM, having sold about 100 of BoA’s smaller prime brokerage accounts to Jefferies & Co in 2009.
BNP Paribas said its prime brokerage operation serves hedge funds in Asia, but declined to disclose figures. Recent surveys by hedge fund research firms indicate that the bank is not among the top 10 prime brokers in the region.
The bank plans to grow mandates through its existing relationships with hedge funds that it services outside of the prime brokerage space. BNP Paribas’ global equities and commodity derivatives platform “is positioned as a partner of choice for many of the global and local [Asian] funds”, says Dufour.
"We will be looking to leverage on those existing relationships and add full-fledged prime services to complete our offering to clients,” particularly US-based funds diversifying into Asia.