BNP Paribas' new cost savings could wipe out its bonus pool

BNP Paribas is taking drastic action. After long years of tinkering at the edges when it comes to cost cutting, the bank has finally decided to get serious. 

In the past two years, BNP has cut €463m in costs at its corporate and investment bank (CIB), mostly by pursuing efficiencies and automation with the occasional redundancy thrown in. Now, however, after a miserable fourth quarter, the French bank wants to get serious. Today it announced plans to cut an additional €350m of costs by 2020, on top of the €500m of recurring cost savings that were already factored in.

BNP's salespeople and traders need to hope that their bonuses for 2018 have already been decided. In 2017, the bonus pool in BNP's corporate and investment bank was €331m, a number curiously similar to the amount BNP is now trying to cut. By eliminating the CIB bonus pool, BNP could solve its problem in one easy move. 

BNP Paribas isn't commenting on this year's CIB bonus pool and needless to say things might not be as bad as all that. As at Deutsche Bank, though, BNP's traders don't look entirely deserving of 2018's bonuses anyway - their performance was poor, particularly in U.S. equities, where an $80m loss on U.S. derivatives trades contributed to a 70% decline in fourth quarter revenues. 

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