New York, NY – Despite weakness in equity commissions and increased capital requirements mandated by Basel III, French bank BNP Paribas recently announced plans to significantly expand its presence in the equity capital markets by hiring a number of equity research analysts, research sales professionals, and investment bankers over the next few years.
According to an article published in the Financial Times last week, BNP Paribas plans to invest more than $70 million by adding 200 equity capital markets professionals over the next three to five years – 100 being equity research analysts, 50 being in research sales, and another 50 being investment bankers. Most of these new hires are expected to be located in London.
BNP Paribas has long had one of Europe’s strongest equity derivatives businesses, though it has had a comparatively weak position in the cash equities markets. The plan to expand its equity research and sales platform is obviously a move by BNP to help it gain more corporate finance business.
The 150 analysts and salespeople are expected to join Exane BNP Paribas, the joint venture established in 2004 between BNP Paribas and UK brokerage firm Exane. According to the firm’s website, Exane BNP Paribas currently employs approximately 100 analysts who cover more than 500 stocks. In the past ten weeks, Exane BNP has already added six equity research analysts and two research sales professionals to the team, with more hires in the works.
The 50 new investment bankers are expected to be hired directly by BNP. This addition would triple the current staff of 25 investment bankers employed by BNP Paribas.
BNP’s plan to expand its equity capital markets business follows the firm’s 2009 acquisition of Fortis Bank, which gave BNP the largest retail deposit base in Europe. These two moves suggest that BNP is attempting to take market share from other firms that have been severely impacted by the global credit crisis.
Some industry observers note that BNP Paribas’ current announcement to invest in its equity capital markets business sounds a lot like an announcement in 2002 to invest an additional €300m in its European equities business over three years. Two months later, BNP Paribas put the plans on hold, citing deterioration in the equity markets.
It will be interesting to see if BNP Paribas actually makes good on its recent announcement to expand its cash equity and banking business, and if this move can help it take market share from other European investment banks that have suffered as a result of the global credit crisis. Only time will tell.