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November 8, 2021

Credit Suisse to refer hedge fund clients to BNP Paribas

By Verdict Staff

Credit Suisse has signed an agreement to refer its Prime Services and Derivatives Clearing customers to French rival BNP Paribas.

The move follows the scandal-ridden Swiss investment giant’s decision to shutter its prime service unit, which lends money to hedge funds and processes their trades.

The unit, part of the bank’s investment banking division, suffered a $5.5bn loss due to the implosion of Archegos Capital.

Credit Suisse, which has been revamping its business under chairman António Horta-Osório and CEO Thomas Gottstein, is folding the prime service to strengthen its focus on wealth management business.

Credit Suisse said that the agreement with BNP Paribas will ‘ensure a smooth migration of business’ for its hedge fund clients.

“Should customers seek to benefit from the referral agreement between Credit Suisse and BNP Paribas, there will be a streamlined process in place to facilitate them obtaining Prime Services from BNP Paribas, under its terms,” the bank said in a statement.

Meanwhile, BNP is currently signing up the clients of Deutsche Bank’s prime brokerage business following the German bank’s exit from equities trading business in m 2019.

The transfer is expected to be concluded this year.

Credit Suisse Q3 results

Credit Suisse reported a net profit of $476m (CHF434m) for Q3 2021, a plunge of 21% compared to CHF546m in the year-ago quarter.

The Swiss bank’s profits were hit by $620m (CHF564m) of litigation expenses related to various issues including the Mozambican corruption scandal and Greensill Capital explosion.

The profits were also affected by a higher tax rate.

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