A new prime brokerage deal with BNP Paribas would mean that up to 800 employees of Deutsche Bank will be transferred. A person with the knowledge of the matter said on Friday that the two companies are proceeding with an initial agreement they had in July.
A 7.4-billion-euro deal
Earlier in July, Deutsche Bank announced that it has managed to strike a preliminary agreement with BNP. The deal covers businesses serving hedge funds and would be worth a 7.4 billion euros ($8.2 billion). However, the bank did not comment on how the personnel transfer will work, and when the final deal will be worked out. Financial Times recently reported that a final deal could be in the works, which was later confirmed Reuters sources, who said that the agreement could take final shape in the weeks to come.
Deutsche Bank is more eager to seal this deal before the end of the year. A quick agreement between the two entities will mean “continuity of service” for their clients. Note that the German bank is unable to keep its clients, some of whom have already left for greener pastures. Hedge fund clients already have balances of about $200 billion with the bank. Sources also reported last month that Barclays is planning to take a massive $20 billion slice of the lender’s prime brokerage business.
The new deal is big for Deutsche
A majority of staff that will be affected by the new deal is based in New York and London. Some back-office staff in India could also be moved. It is being said that the final number of staff transferred would depend on the number of clients who choose to stay instead of leaving the bank. The sources also said that the German lender would also transfer its technology behind electronic equities alongside its prime brokerage platforms.
If the bank can strike a deal with BNP, it will not have to pay redundancy for the staff. It has already committed to removing 18,000 employees this year around the globe to cut costs.
European banks have been feeling the burn of low-interest rates and several big players are now willing to go the extra step in prime brokerage in hopes of seeing some returns. According to data provider Coalition, the world’s top 5 prime brokerages are located on the Wall Street, followed by Barclays, Deutsche, and BNP.