BNP Paribas has faced questions from France’s anti-corruption regulator over its use of an introducer as part of a deal to buy Deutsche Bank’s prime brokerage business last year.
The Agence française anti-corruption (AFA) queried a payment made to a business of a former Goldman Sachs dealmaker that amounted to hundreds of thousands of pounds, according to people briefed on the probe.
The payment was spotted as part of a routine audit by the AFA, details of which were first reported by Bloomberg. The UK’s Financial Conduct Authority has also been made aware of the payment but it has not yet decided whether to start a formal investigation.
BNP executives carried out their own inquiry into the payment to Barbon Advisors, an FCA-regulated business that is run by former Goldman Sachs banker Simon Lloyd, due to its ad hoc nature. But they concluded there was nothing suspicious about the relationship, according to people with knowledge of the matter.
BNP agreed to buy Deutsche Bank’s prime brokerage unit last year as the French lender set about trying to become a global player in servicing hedge funds clients. In June, BNP executives told the Financial Times about its ambitions to displace Goldman Sachs as one of the top three prime brokers globally.
When all client transfers from Deutsche Bank are completed early next year, BNP’s prime brokerage business is expected to have more than $300bn of assets, as much as $200bn of that coming from Deutsche Bank, and revenue in the hundreds of millions a year. Up to 800 staff are expected to move from Deutsche Bank to BNP as part of the deal.
Citigroup was initially the frontrunner to acquire Deutsche Bank’s prime brokerage business after the German lender’s chief executive, Christian Sewing, set about trying to leave the business from equities trading.
But after talks with Citi collapsed, Mr Lloyd tipped off BNP and acted as an introducer to Deutsche Bank. Bardon later received a one-off introduction fee from BNP.
The Paris lender set up a special committee to scrutinise the payment, as it does for all third-party service payments.
The AFA quizzed BNP about its relationship with Barbon after becoming aware of the payments through a routine audit of the bank.
BNP, Deutsche, the FCA and the AFA all declined to comment. Mr Lloyd did not immediately respond to requests for comment.
Additional reporting by Olaf Storbeck and David Keohane
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