BNP Paribas cuts costs as red tape hits

 
Tim Wallace
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FRENCH bank BNP Paribas is launching a major cost cutting programme to shore up profits in the face of tough markets and regulatory pressures, the lender said yesterday.

Profits came in at €514m (£422.6m) for the final quarter of 2012, down 32.8 per cent on the same period of 2012. But income for the year as a whole still increased, rising 8.3 per cent to €6.55bn.

On the back of that success the bank raised its Basel III core tier one capital ratio to 9.9 per cent, well ahead of most of its peers. But the weak economic outlook prompted the institution to outline a shake up costing €1.5bn over the next three years.

By investing in technology and simplifying reporting processes BNP Paribas hopes to save €2bn per year.

The bank has not disclosed how many jobs will go in the restructuring, but said no business units will be cut. And it argued some sectors are growing, even as there are troubles in its recession-struck home market.

BNP is planning to expand its Asian investment and corporate businesses, hiring 1,300 more staff in the region.

And its fixed income arm saw revenues rise 2.2 per cent on the year as it benefits from a rebalancing of the European firms away from bank debt and into the capital markets.

“There is increasing demand for fixed income securities from smaller issuers, particularly in Europe – it is one side effect of the new regulations,” fixed income head Fred Janbon told City A.M., referring to new capital rules making it expensive for banks to lend to smaller firms. “So far in the year we have seen 57 bond issues from clients who have not issued debt before.”