For Recruiters
It's not the best time for BNP's share price to be falling.

BNP Paribas bankers stand to lose €9m in bonuses as the share price falls

As stocks are roiled by the market rout, bankers at BNP Paribas might want to cash in quickly. The French bank's share price is down nearly 3% today to €62.8 and may yet fall further still. Were it to fall below €51.20, BNP's senior staff would lose a chunk of deferred bonuses issued in 2010, worth €9m at the current share price.

The deferred bonuses, which take the form of stock options, are declared in documents accompanying today's release of BNP's full year results for 2017.  Issued eight years ago with an exercise price of €51.20, they expire on March 3rd. Around 814k of the 2.4m options initially granted are still outstanding, suggesting holders were hoping for an increase in BNP's share price which may no longer be forthcoming.

Today's releases give little indication of the total size of the bonus pool at BNP's corporate and investment bank for 2017. However, BNP states that the value of its group-wide deferred compensation plan for this year will be €345m, up only slightly on the €327m it allocated to deferred compensation last year. Unless BNP is planning to hike cash bonuses, it therefore looks like the bank's bonus pool will be flat.

If so, this will be despite a 15% year-on-year increase in the pre-tax corporate income at BNP's corporate and investment bank in 2017. It will also be despite a very handsome pre-tax return on equity of 16% in the CIB. - If it wanted to pay more, BNP probably could, but it doesn't. This is why its corporate and investment bank had a cost income ratio of 70% for 2017 while Deutsche's was 90%+.

Nonetheless, there are signs that all is not great at the French bank. Under its 2020 development plan, BNP intends to achieve compound annual revenue growth of 4.5% at its CIB over the three year period from 2017. Despite onboarding new clients (while most other banks have been trimming client lists) and investing in new talent, revenues at BNP's CIB grew by only 2.1% last year thanks to "unfavourable exchange rate effects."

The double digit percentage growth in profitability at BNP's CIB last year was therefore mostly the result of cost-cutting. This doesn't bode well for compensation. It also means that BNP's bankers may want to sell those 2010 options at a profit while they still can.

Have a confidential story, tip, or comment you’d like to share? Contact:

Bear with us if you leave a comment at the bottom of this article: all our comments are moderated by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. Eventually it will – unless it’s offensive or libelous (in which case it won’t.)



Photo credit: BalkansCat/Getty

AUTHORSarah Butcher Global Editor

Apply for jobs

Find thousands of jobs in financial services and technology by signing up to eFinancialCareers today.

Boost your career

Find thousands of job opportunities by signing up to eFinancialCareers today.
Latest Jobs
State Street Corporation
Business Strategy & Planning, Assistant Vice-President
State Street Corporation
New York, USA
State Street Corporation
Cloud Platform Engineer - Entry Level
State Street Corporation
Boston, USA
Selby Jennings QRF
Quant Risk Analyst - Global Macro
Selby Jennings QRF
Manhattan, USA
Capgemini Financial Services USA, Inc.
Public Relations Manager
Capgemini Financial Services USA, Inc.
New York, USA
Selby Jennings Strategy
Head of ECM Analytics
Selby Jennings Strategy
Wilmington, USA