SocGen's feeble fixed income business needs its BNP Paribas saviour
It's been a whole month. Francisco, "Chico", Oliveira arrived at SocGen on January 6th after his 20-year career at BNP Paribas. Today's SocGen results suggest he's got a lot of work to do there.
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Oliveira was the global head of credit and macro trading at BNP Paribas before he suddenly disappeared during a "rationalisation" of the fixed income business last September. SocGen promptly hired him in a bigger job as co-head of global markets and global head of fixed income and currencies.
SocGen has big plans involving Franciso. Last month, Risk Magazine reported that SocGen is planning an 'ambitious expansion' of its fixed income business and aspires to capture more flow business in particular. Oliveira will drive this growth, along with Sylvain Carter, SocGen's former global markets head who's been despatched to run global markets in the Americas. In the US, Risk said SocGen's fixed income expansion will be attempted with particular "urgency."
Oliveira's task is underscored by SocGen's fourth quarter performance. Fixed income sales and trading revenues at the French bank were €501m, compared to €1.2bn at BNP Paribas. For the full year, SocGen's fixed income revenues fell 3.2%, versus a mere 1.4% fall at BNP. US banks, by comparison, achieved increases of between 1% (Citi) and 10% (Morgan Stanley) in their fixed income sales and trading revenues last year.
Speaking on today's investor call, SocGen said it has "profoundly changed" its markets business to reduce volatility. The bank said its underperformance compared to US banks in Q4 was partly because it doesn't "carry high credit inventories" and that it counts securitisation revenues in global banking.
Oliveira's background is in macro trading. His exit from BNP Paribas coincided with the departure of various other rates traders and the arrival of Conor Davies from Citi to lead institutional sales.
SocGen's equities business has been derisked after a loss related to structured products in 2020. The bank sealed a joint venture with Alliance Bernstein for equities and research last April and appears to be despatching senior equities professionals like Martin Turner in London.
By comparison, Oliveira is expected to hire for SocGen's fixed income business. He's particularly expected to hire from BNP Paribas once his non-solicitation expires. Oliveira wasn't always popular with BNP colleagues, but one says people will follow him - if SocGen pay enough to make it worthwhile
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