Investment bankers at BNP Paribas have a small reason to be cheerful; Jean-Laurent Bonnafe has confirmed that the bank doesn't intend to add to the 1,400 job cuts planned in its corporate and investment bank in the near future. Unfortunately, that's where the good news ends.
BNP Paribas' CIB division posted a pre-tax profit of just €6m in the final quarter of 2011, compared to €1.1bn for the same period in 2010. Overall, the bank took a 51% hit to net profits – to €765m – after taking a €567m write-down on its Greek sovereign bonds and booked a €148m charge as it cuts its balance sheet.
In Q4, BNP Paribas implemented 40% of the 1,400 CIB job cuts it announced in November, at a cost of €184m, and expects to book a further cost of €200m as the remaining 840 bankers are shown the door.
The bonus pool in the division has been slashed by half, the bank said without providing specific figures, and BNP Paribas is keen to point to how its 63% cost-income ratio in CIB compares well with its peers. However, in the fourth quarter, its cost-income ratio stood at a hefty 95.4%, compared to 57.7% for the same period in 2010.
The €6m pre-tax profit within CIB was largely down to the €374m achieved within its corporate bank. Its advisory and capital markets business slipped €368m into the red, after the fixed income division booked a €510m loss from sovereign bond sales, meaning that cost income ratio here soared to 153.5%. Revenues within equities and advisory fell by 31.2% to €405m.
Nonetheless, Bonnafe suggested that 2012 has been better so far: "The beginning of the year has been quite strong in investment banking ... (We see) some kind of stabilisation of the euro zone situation," he told Reuters.
Across the bank, salaries and bonuses totalled €10.8bn, a reduction of just 5% on 2010.