French banks pick a fine time to lose their flair as bets on equity derivatives go awry
France’s biggest banks have lost their savoir-faire at one of the worst possible times. Bets that went awry on equity derivatives — once a craft in which the French firms excelled — have cost BNP Paribas SA, Societe Generale SA and Natixis SA hundreds of millions of dollars in income in 2020. They’ve also cost several top executives their jobs.
Of the three banks, only BNP will get past this relatively unscathed, and that serves as a cautionary tale to others. Relying too much on a hugely volatile, risky activity such as stock derivatives is a dangerous strategy reminiscent of pre-financial crisis times. The companies’ boards and regulators should have seen this coming...
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