October 28, 2015 / 9:13 PM / 4 years ago

BNP Paribas eyes technology as way to cut investment banking costs

PARIS, Oct 28 (Reuters) - BNP Paribas may make significant middle and back office job cuts as part of a plan to cut costs in its investment bank that includes using “big data” technology to identify customer needs, a person familiar with the matter said.

Like rivals around Europe, France’s biggest listed lender is in the throes of an overhaul that could lead to job cuts, as tightening regulation in Europe and the United States strains finances.

As part of a drive to cut costs by 20 percent in its corporate and institutional banking (CIB) division, which employs more than 29,000 people, the bank is weighing the use of innovative computer technology known as “big data” to identify client needs more precisely and save money, the person said.

The technology, which is also popular among asset managers and insurers, could help the bank with a range of tasks, from checking whether a client has read research to proposing the next transaction opportunity.

“This will lead to a significant reduction in middle and back offices (staff). You would not need so many sales people any more either,” the person said.

BNP is due to report third-quarter results on Friday but does not plan to present its CIB strategy until full-year results early next year.

BNP Paribas has not yet given details to unions in France of how the bank plans to achieve the 20 percent cost cut, a union representative told Reuters. Job cuts in line with the proportion of savings would amount to about 6,000.

“Investment banking is going through a difficult period ... The management has been committed not to allow layoffs,” the representative said.

A report in Les Echos newspaper in June said the bank had told a group of executives that it was targeting a 20 percent cut in its CIB costs by 2019.

The source and the union representative both confirmed the 20 percent cost-saving target.

A BNP Paribas spokeswoman declined to comment.

BNP Paribas has targeted a return on equity of above 10 percent in 2016 through a plan to cut costs, expand outside Europe and boost cross-selling. The ratio was 10.1 percent in the first half of the year and 7.7 percent in 2014.

BNP brought together equities and fixed income lines under one structure in 2014, and appointed Jean Gerardin, who had been in charge of an equities and commodity derivatives business overhaul in 2010, to head the new division.

“BNP has not really streamlined its CIB operations over the past years. It had to maintain trading platforms in Paris, Brussels and in London. And those are too expensive to run all at the same time,” said Gildas Surry, a portfolio manager at Axiom Alternative Investments. (Reporting by Maya Nikolaeva; Editing Sinead Cruise, Andrew Callus and Adrian Croft)

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