As Deutsche Bank announced its plans to exit the equity market, earlier this month, its biggest European contender, Barclays, welcomed the news with hawkish eyes, awaiting to grab the bank’s rich chunk of customer base worth $20million. If the British investment bank succeeds in its plans, it would not only become Europe’s leading investment institution but also would be able to complete with its US rivals more strongly.
Barleys is trying to establish its name in the hedge funds, and trying to rise back especially after it succeeded to vote down the New York based activist and investor Edward Bramson, in his bid to enter the bank’s board. Bramson tried to tear down the UK investment bank’s trading operations.
The German bank called the exit plan, a part of a major restructuring drive. To ensure a smoother transition for its clients, it signed a deal with the French, BNP Paribas to take care of the clients’ portfolios trading in prime finance and electronic equities.
Some of the bank’s clients have showed interest in moving their business over to the French bank, while some have opted for other options including Barclays, Goldman Sachs, JP Morgan, etc.
A spokesman for Deutsche Bank said in a statement, “It is not unexpected and perfectly natural that some clients may wish to move balances to other providers as a temporary measure while our discussions with BNP Paribas are ongoing…Our discussions with BNP Paribas are progressing well and we are confident that balances will move back once the deal has been completed.”
The timing of Barclays’ hedge fund expansion plan couldn’t have been better, as with Deutsche Bank’s exit it was able to poach a client base with $20 billion in balances. The rich base included a wonder client with balance of $10 billion, with whom the UK bank already established relationship. Reuters reported that the bank has been trying to capture the Deutsche bank’s prime brokerage business. As per the report published by bloomberg last week, the overall size of the business is estimated to be around $167 billion. It has put immense pressure on Deutsche Bank seal the deal with BNP Paribas as its clients are pulling out their funds worth $1 billion, per day.