BNP Paribas is continuing to expand its presence in the Nordics, leveraging its extensive resources and expertise to provide a comprehensive range of services to Institutional clients in the region. With over 1,000 staff in the region, BNP Paribas has a strong footprint in the Nordics and is increasingly sought after for prime brokerage, fund services, and other market solutions.

Historically, BNP Paribas has most been renowned for serving macro and credit strategies, but the acquisition of Deutsche Bank’s global prime finance and electronic equities business in 2019 and full acquisition of Exane’s equity research and execution business in 2021 broadened out the offering. The bank has also expanded its capabilities in private capital, including hybrid strategies that combine both liquid and illiquid assets.

With an integrated Global Markets and Fund Services offering, the bank specialises in long/short equity funds, credit, global macro, and high-yield managers, as well as systematic and quantitative managers. BNP Paribas is taking a flexible approach, allowing firms to start with one core service and gradually expand to a diverse range of offerings over time. “We want to be a one-stop shop in the alternatives space, offering bundled services or à la carte,” says Adam Persson, Head of Business Development for Securities Services in the Nordic region, who is based in Stockholm.

DEDICATED FUND SERVICES FOR HEDGE FUNDS

BNP Paribas is the world’s fifth largest custodian and a leading European provider of fund administration services, with Ireland being an important operational hub for its hedge fund services. The acquisition of Credit Suisse’ fund administration business in 2016 was helpful and was recently bolstered in 2023 by referral agreement with HSBC and the migration of a large portion of its fund administration clients to BNP Paribas.

BNP Paribas’ full-service offering does also give managers the option of outsourcing some middle-office and back-office functions, though this is a case-by-case decision and some managers prefer to keep these activities in house.

BNP Paribas maintains good relationships with other prime brokers, including SEB, and often works alongside them to provide a range of services. “It is very unusual to have only one prime broker. As custodian and fund administrator we work closely with several prime brokers,” says Persson.

Commercial realities mean that smaller and earlier stage firms may need to demonstrate a willingness to use multiple services in order to secure a relationship with the bank. “Smaller clients have more bargaining power if they choose a bundle of services versus a mono-product relationship, which may not be profitable enough. Larger clients may already have a range of service providers in place and might choose a smaller proportion of services,” says Persson.

CROSS ASSET PRIME SERVICES

BNP Paribas ambition is to be the #1 European prime services provider. Credit and FX prime brokerage sits under the same umbrella as the traditional equity prime brokerage platform. The bank’s financing and cross-margining models are also designed to reduce the amount of collateral and margin required, making it easier for clients to manage their risk.

By combining its markets expertise with the collateral and custody experience, BNP Paribas offers its clients a global and integrated platform for execution and clearing of both listed and OTC derivatives. “We leverage this business structure to provide the full package of investor services to our clients, including prime brokerage services and securities financing,” says Juha Sternberg, Senior Business Development Manager for Derivatives Execution & Clearing in the Nordics and based in Stockholm.

“We provide access to 70+ derivatives exchanges and major CCPs via direct membership, across the global product range from commodity derivatives, financial listed derivatives and cleared OTC derivatives,” Sternberg continues. To stay in the forefront as a leading derivatives provider in Europe, BNP Paribas continues to invest in its platforms to enhance client experience, resilience and risk management capabilities.

BNP Paribas has a good inventory and can also source it elsewhere and re-use inventory. “We borrow a lot from institutional clients, including our custody clients. We have an interest to grow our custody business in the Nordics, and with that our Nordic sourcing network,” says Persson. As the business grows, and BNP Paribas becomes custodian for more institutional clients such as pension funds, there is a virtuous circle as more connectivity brings more access to borrow.

A FULL RANGE OF GLOBAL MARKETS CAPABILITIES

In addition to its prime and fund services, BNP Paribas can add value to clients via research and execution capabilities across all asset classes. Within equities alone, the bank’s local Nordic presence includes a team of seven – from research analysts, sales and sales trading to derivatives specialist – serving as a gateway to the firm’s Global product suite.

Capital introduction is another key area of focus for BNP Paribas, which takes a case-by-case approach to matching managers with investors. The bank has strong relationships with large allocators and has recently produced a report on hedge fund allocation trends based on interviews with 197 allocators managing over $870 billion. According to the survey, 86% of investors are planning to make new hedge fund allocations, of which 26% will be allocating using new cash. Fundamental equity strategies dominate investor interest followed by credit and discretionary macro.

A HUMAN AND LOCAL CULTURE

Unlike some other firms, BNP Paribas is committed to maintaining a human touch in its fund services offering, recognizing that not everything can be automated. They view digital capabilities as a powerful support rather than a replacement. The bank is looking for sustainable growth and is committed to delivering a premium service to its clients. 

Overall, BNP Paribas is well-positioned to strengthen its position in Europe’s hedge fund market, particularly in the Nordics, where it is seeing interesting launches in equities, credit, and macro strategies.

This article is featured in HedgeNordic’s “(Em)Powering Hedge Funds” publication.