No one said changing would be easy
YET again, the investment bank sticks out like a sore thumb. Profits rose at every single division of BNP Paribas last year with one exception: the corporate and investment bank.
This is bad news for the City, where BNP Paribas employs thousands – many of whom it is now laying off.
Hence the “restructuring charge”, or the cost of golden goodbyes in the fourth quarter totalling €184m.
As its rivals are also finding, the task of hiring and firing over recent years has been a very expensive business.
Meanwhile, total revenues in the division dropped from €2.7bn in the fourth quarter to 2010 to €1.6bn in the fourth quarter of last year. A hefty half a billion of that was due to the bank offloading Greek bonds at a loss.
It also swallowed an additional €148m of losses on loans sold during the quarter. In total, the investment bank’s balance sheet shrank a startling €22bn last year.
The bright side, if there is one, surely lies in the fact that at least some of Europe’s banks have strengthened their capital positions enough to take these losses now, rather than hoarding them for fear of the cost of write-downs. Perversely, some of these losses are a sign of strength.
But it is still a lot easier to be gloomy: the bank expects another €650m in write-downs in the investment bank this year, and another €200m in restructuring costs.
The truth is that even if Brussels muddles through the Eurozone crisis, there is an awful lot more deleveraging pain to come.