Credit Suisse will advise hedge fund clients to shift to BNP

Credit Suisse Group AG and BNP Paribas SA reached an agreement in which the Swiss firm will recommend its hedge fund clients move to the French bank after it decided to exit the business.

The Swiss lender said it signed a referral agreement to "support its Prime Services and Derivatives Clearing customers in their selection of alternative providers for such services," according to a statement on Monday. It didn't provide further details.

Credit Suisse is exiting the prime brokerage unit that lost billions in the collapse of Archegos Capital Management as it moves more capital into its steadier wealth management business.


That was the centerpiece of a new strategic plan announced by the bank last week, as Chairman Antonio Horta-Osorio seeks to move the bank past one of the most turbulent periods in its recent history.

BNP is already in the midst of taking on Deutsche Bank AG's prime brokerage business as part of the German bank's 2019 exit from equities trading.

That deal was more involved, as it included the transfer of assets and employees rather than just encouraging clients to move themselves. The transfers are scheduled to complete this year.

Prime-brokerage divisions are vaunted within investment banks, both for generating profits and cultivating relationships with wealthy hedge-fund managers.

They typically produce about one-third of equities-trading revenue across Wall Street and generated about $15 billion last year, according to data from research firm Coalition Greenwich.

Still, the businesses require significant capital as a buffer against potential lending losses and investments in technology.