BNP Paribas SA laid off some of its U.S. high-yield bond trading and sales team, as the new head of corporate and investment banking reshapes the division.
According to people close to the matter, BNP fired eight employees from its bond trading team. The job trims were made the same day that the largest French bank by market capitalization made major changes in its corporate and investments unit.
Kevin Cook, who left Citadel Securities in 2012 and joined BNP as head of U.S.’s high-yield credit sales, and Michael Dowdell, head of junk-bond trading, were also fired, according to people with knowledge of the situation.
After the financial crisis, BNP grew its junk-bond operations in New York attracting investors interested in high-risk high-reward securities, but surrounded by a low-interest-rate environment. However some analysts projected an increase in interest rates.
According to Bank of America, the average price of U.S. high-yield corporate bonds decreased form 104.43 cents in August to 101.03 cents on November 19.
The job cuts came amid major restructuring in the the bank. Yann Gérardin, who was appointed to lead the investment banking unit two month ago, had gathered a new management team. Under the restructuring plan, the name of the division will be changed from corporate and investment banking to corporate and institutional banking.
Mr. Gérardin, who began his career at the bank more than 25 years ago, uncovered a plan for the division to deliver a more “holistic” offering to clients.
“The banking industry has changed dramatically” Mr. Gérardin said. “Business models are being industrialised, rationalised, digitalised. Clients are expecting us to serve them holistically with added-value and industrialised solutions” he added.
The restructuring plan also includes head of fixed income Frédéric Janbon to become special adviser to BNP’s general management, Pascal Fischer was given the leading position of capital markets in Africa, the Middle East and Europe. Meanwhile Olivier Osty was appointed head of sales, structuring and trading. Patrick Colle will stay as head of securities services, but will now report to Mr. Gérardin.
BNP Paribas SA fell 1.69% on Thursday and closed at €47.82 in Paris. On Friday the stock gained 0.88% to trade at €48.24 at 09:18 GMT, marking a one-year decrease of 10.81%. The company is valued at €60.62 billion. According to the Financial Times, the 29 analysts offering 12-month price targets for BNP Paribas SA have a median target of €57.00, with a high estimate of €66.10 and a low estimate of €25.00. The median estimate represents a 19.20% increase from the last price of €47.82.
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