BNP Paribas SA pledged to overhaul its investment bank, cutting costs,
to help free up capital as it reported a 52 percent drop in
fourth-quarter earnings. The shares surged.
Net income at France’s biggest bank fell to 665 million euros ($744
million) from 1.38 billion euros a year earlier after a goodwill
writedown at its Italian unit, the Paris-based company said Friday. That
missed the 864 million-euro average estimate of five analysts surveyed
by Bloomberg.
Europe’s largest banks are under pressure to shrink their securities units and focus on the most profitable businesses as regulators toughen scrutiny of riskier activities.
Under its overhaul, BNP is seeking to cut risk-weighted assets at the investment banking by 20 billion euros and trim 1 billion euros in costs by 2019 as it seeks to focus on businesses that generate higher fees and use less capital.
The shares jumped 3.6 percent to 42.44 euros at 9:10 a.m. in Paris. They have decreased about 19 percent this year.
Deutsche Bank AG, which runs Europe’s largest investment bank, and Credit Suisse Group AG both had losses at their securities units in the fourth quarter. Both rely more heavily on those units than BNP does and are also cutting back those businesses.
At UBS Group AG, which overhauled its businesses in 2012 to focus on wealth management, the investment bank reported a drop of 63 percent in pretax profit in the period.
At BNP’s corporate and institutional banking, CIB, which houses securities trading, pretax profit slipped 9.2 percent to 574 million euros in the fourth quarter from a year earlier. Global markets reported revenue of 1.18 billion euros, up 8.9 percent, with pretax profit slipping 12 percent.
Europe’s largest banks are under pressure to shrink their securities units and focus on the most profitable businesses as regulators toughen scrutiny of riskier activities.
Under its overhaul, BNP is seeking to cut risk-weighted assets at the investment banking by 20 billion euros and trim 1 billion euros in costs by 2019 as it seeks to focus on businesses that generate higher fees and use less capital.
The shares jumped 3.6 percent to 42.44 euros at 9:10 a.m. in Paris. They have decreased about 19 percent this year.
Deutsche Bank AG, which runs Europe’s largest investment bank, and Credit Suisse Group AG both had losses at their securities units in the fourth quarter. Both rely more heavily on those units than BNP does and are also cutting back those businesses.
At UBS Group AG, which overhauled its businesses in 2012 to focus on wealth management, the investment bank reported a drop of 63 percent in pretax profit in the period.
At BNP’s corporate and institutional banking, CIB, which houses securities trading, pretax profit slipped 9.2 percent to 574 million euros in the fourth quarter from a year earlier. Global markets reported revenue of 1.18 billion euros, up 8.9 percent, with pretax profit slipping 12 percent.
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