BNP Paribas equities traders are fretting about bonuses

Friday is bonus day at BNP Paribas. The French bank doesn't pay as well as US banks, but it doesn't pay badly either. In 2023, the average material risk-taker (often a senior trader or banker) at BNP's corporate and investment bank earned €1.1m ($1.2m). This year, the overall bonus pool in the CIB is expected to rise by 5%. Lucky BNP MRTs might get €1.2m instead.

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Or maybe they won't. For all the promised generosity, some at BNP are concerned. In the French bank's markets team, there have been job cuts and personnel changes. BNP Paribas isn't commenting, but in equities especially people are unsettled about the implications for pay.

In equities sales and trading, Brian Gallagher, the head of European execution, was let go at the end of January. Jason Yates, his counterpart in APAC left at the same time. Both had joined from Morgan Stanley within the past four years.

Gallagher and Yates' exits bode badly for BNP's equities bonuses. Revenues in the business increased by 30% year-on-year in the final quarter, thanks to what the bank described as a "strong increase" in the Americas and APAC, across prime service cash and equities derivatives. However, insiders say the growth came after poor early quarters and conceals issues in the business, which contributed to the exits of Gallagher and Yates.

BNP's equities business is the product of various bolt-on acquisitions. They include Exane in July 2021 and Deutsche Bank's prime finance and electronic equities business in 2022. Long-serving BNP staff say the Deutsche Bank incomers brought a brash "hire and fire" culture. Senior BNP people left and ex-Deutsche Bank traders like Yani Liu and Ryan O'Sullivan are now prominent instead. Deutsche Bank London are notoriously generous, and insiders suspect that the DB arrivals might be better paid. 

BNP also availed itself of teams from Credit Suisse. In 2023, the bank hired a Credit Suisse risk arbitrage team comprised of Susan Stryker Marinello, Andy Martin and Simon Scott. It's not clear how profitable this team has been, but there are unconfirmed suggestions of losses. "Merger arb is like picking up pennies in front of a steam roller," observes one insider. If they were rolled, they weren't the only ones: hedge funds Balynasy and Schonfeld cut merger arb teams in June. 

There are questions, too, about Exane's place in BNP's expanded equities ecosystem. Exane is a high-touch Europe-focused business, but insiders suggest BNP really needs to grow its business in the US, particularly if it wants to make the most of Deutsche's prime broking clients. "BNP was historically a derivatives house," says one insider. "It's not in its DNA to have the kind of client-focused approach you need to onboard new hedge funds." 

It doesn't help that historic scars run deep. In 2014, the French bank paid $9bn to settle a money laundering case in the US. Insiders say this has led to a convoluted registration process that makes it difficult to onboard new equities clients. "We're procedurally risk-averse," says one. 

With the bonus increase spread thinly between teams, there are fears that the issues mean BNP's disparate equities traders will end up worse off. Tomorrow will reveal the truth. "I'm hearing mediocre rather than bad," says one senior trader. "But expectations have been well-prepared." 

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