BNP Paribas plans bid for Deutsche Bank's equity derivatives

NEW YORK (Reuters) - French lender BNP Paribas (BNPP.PA) plans to bid for Deutsche Bank’s (DBKGn.DE) equity derivatives book and is hopeful it can beat off rival bidders to secure a deal in the next few weeks, according to sources familiar with the matter.

Deutsche Bank is selling the portfolio as part of a restructuring that will see it exit equities trading and other unwanted businesses and shed 18,000 staff globally. Chief Executive Officer Christian Sewing is hoping the plan will turn around the bank, whose shares hit a record low this month.

Deutsche Bank plans to auction its equity derivatives portfolio next month having received significant expressions of interest from banks, private equity firms and hedge funds, the sources told Reuters. It may sell the book in separate tranches rather than in its entirety, they said.

BNP is already close to taking control of Deutsche Bank’s prime brokerage business, which serves hedge fund clients. A preliminary deal was struck in July which is expected to be formalized early next month. Any equity derivatives deal would be separate from that transaction, the sources said.

BNP and Deutsche Bank declined to comment.

Reuters reported last month that Deutsche Bank’s derivatives exposure is tying up capital that could have generated income of 500 million euros a year. Reuters also reported the bank has set aside over 1 billion euros to cover the cost of offloading derivatives moved to its so-called “bad bank,” or capital restructuring unit to be wound down or sold.