US Debt: French banks launch into US mortgages
BNP and SG say they are taking a calculated risk, but can the investment pay off?
French banks SG CIB and BNP Paribas may only have a small and mostly niche presence in north America, but of late they have been pushing into a highly competitive wholesale area – the US mortgage market. On May 11, SG announced it was setting up a new US residential mortgage-backed business, hiring directors David Chang from Deutsche Bank, Abner Figueroa from Eurohypo, Carole Mortensen from UBS and Rob Pak from Bank One, and an analyst, Yuan Zhou, from C-Bass. Graham Henley, who joined SG from Garban-Intercapital at the end of last year, will also be part of the new US team.
SG says the move will complement its existing RMBS operations in Europe and Australia and add distribution capacity while giving US issuers the option to tap the European market. BNP Paribas plans to build a fully fledged US mortgage business and add a new revenue line to its existing US rates product line up of derivatives, treasuries, inflation-linked bonds and agencies.
Since the beginning of the year, it has been expanding its MBS team in New York and has set up a new office in Tysons Corner, Virginia. It has hired seven MBS bankers from the Federal Home Loan Mortgage Corporation, four in sales to work in the Virginia office, including Kevin Heal as head of sales there, two originators in Virginia, and one other trader, Tim Coyne, based in New York.