Exits from BNP's rates business: are long deferrals to blame?

People have been leaving the interest rate business of BNP Paribas. The precise number of exits is unclear. According to one recruiter, it's as high as 11. According to one insider it's as low as four. BNP Paribas isn't officially commenting.

We count at least five. They include Diego Megia, who went to RBC; David Martins Da Silva, who joined BNP Paribas from Deutsche Bank in 2006, and is going back there; Paul Swaddling, David Slater, and - allegedly - Jalal Al Hassad.

Rates are still a hot area, and this is the traditional time of the year for post bonus movement, so it may be wrong to read too much into BNP's exits. However, one recruiter claims they're higher than they might have been because of BNP's deferral programme.

Officially, BNP has said little about the structure of its deferrals, save that at least 50% of bonuses are being deferred over 3 years. The headhunter alleges that the issue in the rates business is that deferrals are back-ended, with 30% vesting in year one, 30% vesting in year two and 40% vesting in year three. At other banks, vesting is generally equal over three years.

"Competition in the market is so high that banks are willing to buy out deferred stock. It's not acting as a retention tool by any means," he says.