AIG forex prime brokerage bought by BNP Paribas

The US foreign exchange prime brokerage business of AIG Financial Products (AIG FP) has been transferred to BNP Paribas, along with eight staff.

The deal gives the French bank a foothold in spot and derivatives forex prime brokerage in the US. A source told Risk the bank intends to integrate AIG FP's former brokerage platform into its product offering within the next six months for a limited number of clients. A full global launch is expected to follow in January 2010.

As part of the move, Joseph Buthorn, former head of prime brokerage in AIG's Connecticut-based trading group, becomes the bank's head of forex prime brokerage. He will report to Kip Testwuide, head of origination and distribution in the Americas.

Beleaguered insurer AIG has been winding down AIG FP since last September, when the unit's activities in monoline insurance almost brought down the firm. Since then, it has received tens of billions of dollars in US government aid and asset guarantees.

In January, AIG FP's commodity index business was purchased by UBS for $15 million, plus a possible further $135 million, depending on its performance.

The firm's latest divestiture adds to BNP Paribas's growing prime brokerage offering. In June 2008, the firm entered US prime brokerage through a deal to pick up Bank of America's equity prime brokerage business. Complementing its existing synthetic offering, the transaction brought the French bank 300 new staff and 500 clients.

A spokesman for AIG confirmed the transaction took place.

See also: AIG trims loss in Q1
AIG dismantled risk controls on CDS portfolio, says Greenberg
US to restructure AIG bailout after $61.7 billion Q4 loss
UBS "reprioritises" commodity business
BNP Paribas to purchase Bank of America prime brokerage arm

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