BNP Paribas' corporate and investment bank (CIB) has got a new head. As of 1 October, Yann Gerardin, the French bank's former head of global equity derivatives and commodity derivatives, has taken charge of the CIB as a whole. His predecessor, Alain Papaisse, is off to the U.S. to sort out BNP's issues on the other side of the Atlantic following the $9bn fine it received earlier this year for violating U.S. sanctions.
What will Gerardin do with his new powers? BNP declined to comment. But insiders say BNP is gearing up for a hiring spree in Gerardin's area - equity derivatives.
Following strong performance of the equity derivatives business in 2014, the French bank is said to be making multiple hires across equity derivatives over the next few months. At the time of its last quarterly results in July, BNP said revenues across its equities and advisory business had risen 22% year-on-year in the second quarter and that there was a 'good drive' to both flow and structured equities products.
Nonetheless, BNP's alleged enthusiasm for hiring equity derivatives professionals has raised a few eyebrows among headhunters, who point to the fact that the French bank only acquired RBS's equity derivatives business in February 2014. RBS's business is said to have had more than 200 staff, only a fraction of whom have appeared at BNP Paribas. In the past couple of months, our research suggests that BNP has quietly added only five ex-RBS equity derivatives people. They include: Jonathan Johnstone, RBS's former director of equity liquidity management, Nigel Grice, a former VP in futures and options trading at RBS, Aura Vaisbrot, an emerging markets structurer from RBS, Daniel Barker, a former RBS MD in equity derivatives and investor products, and Anita Brand, the ex-head of marketing for structured equity at RBS. Many of the others seem to have fallen by the wayside.
In theory, BNP is supposed to be cutting costs in its corporate and investment bank. As Deutsche Bank's analysts pointed out last month, the French bank is targeting a cost-income ratio for the business of 69%, but is up against regulatory costs, which contributed to a 12% increase in operating expenses last quarter. It's also trying to expand its footprint in Asia and North America. In theory, therefore, Europe should be the last place BNP is trying to hire.
In fact, however, the Financial Conduct Authority register suggests BNP has been busy adding all kinds of staff in London. Over the past couple of months, it's also recruited Jo Wang, an equity salesperson from Bank of China, Stephanie Willcocks, a DCM financial institutions group (FIG) banker from Nomura, Jawad Kayani, an emerging markets trader from Morgan Stanley, and Neill Kearney, a high yield credit trader from Nomura. At this time of year, those hires are not likely to have come cheaply.
The big question, say headhunters, is not whether Gerardin will continue BNP's late-2014 hiring spree, but whether he will create a cross-asset sales team in the style of SocGen. Given Gerardin's background in equity and commodity derivatives, this seems fairly inevitable.