Opera Trading lost Us$30mil before closing
LONDON: A BNP Paribas SA division created to make speculative bets for the bank’s own account lost tens of millions of US dollars last year as trading revenue slumped amid volatile markets, leading executives to shutter the business.
Opera Trading Capital, which ceased trading 26mil in January, posted a loss of (Us$30mil) for 2018, filings show. Net banking income before operating expenses slumped 3mil, 91% to less than the worst result since Opera began trading in 2015, in a year that started with a sudden spike in volatility, moved on to repercussions from Turkish economic turmoil and was capped by a plunge in US stocks.
Opera’s disappointing performance was part of a wider trading slump at BNP that prompted chief executive officer Jeanlaurent Bonnafe to overhaul the Paris-based bank’s markets division in January and push through a fresh round of cost cuts.
The closure –- and the almost simultaneous wind-down of a similar unit run by Societe Generale SA – also marked the end of French banks’ ambitions for proprietary trading; prop desks were banned for deposit-taking lenders in the US after the financial crisis, but only restricted in Europe.
BNP executives have completed the winddown of Opera, according to Alexandra Umpleby, a spokeswoman for the lender in London. She declined to comment further.
The accounts also show how Opera increased in size last year, by contrast with Socgen’s prop desk, called Descartes Trading, which was being pared back by the bank’s executives. Descartes lost about 18 million euros last year, Bloomberg reported in July.
Assets at the BNP unit climbed 4% to 2.6 billion euros as traders piled into “unlisted” bonds and other fixed-income securities, filings show.
The division’s portfolio of interest-rate derivatives -- complex products that investors can use to profit from changes in the direction of interest rates -- swelled 14% to a notional value of 393bil.
Most of Opera’s traders have since departed BNP for roles at hedge funds. Stephane Liot, who had overseen the business, joined Brevan Howard Asset Management as chief operating officer for trading in June.