BNP TO MANAGE DOWN RWAs

The WSJ is reporting that BNP Paribas is planning to manage down risk weighted assets by Eur20 billion in a rebalancing of it business portfolio aways from capital intensive businesses like fixed income derivatives in favour of less risky business lines. The bank reportedly plans to shrink RWAs by 11%. BNP Paribas and other firms are responding to the game of banking twister where they are forced to make difficult decisions in light of changing regulation changing the capital adjusted return profiles of historical core businesses such as derivatives. Yann Gerardin, who runs the CIB at the bank and joined BNP via its successful equity derivatives business years ago, wants the bank to refocus on businesses which are less balance sheet intensive and serve as a bridge between mid-sized European corporates and the non-bank capital markets, such as bond markets. The WSJ link is available here: http://www.wsj.com/articles/bnp-paribas-profit-halved-by-italian-write-down-1454652012.