Calyon cuts back derivatives operations

Calyon will cut 500 jobs and pull out of the structured credit and derivatives markets as part of a plan to survive the market downturn.

In its latest three-year plan, published on September 10, the French investment bank said it would step up cross-selling efforts to customers of other divisions of its parent company, Crédit Agricole.

Calyon will focus on structured finance, equities (including equity derivatives) and fixed income, concentrating on existing corporate clients of Crédit Agricole. "The new Calyon will be the bank for the Crédit Agricole Group's large corporate and institutional clients," said Calyon chief executive Patrick Valroff. Calyon will also use its international sales network to support other group companies

Valroff took over in May this year, succeeding Marc Litzler, the ex-Société Générale derivatives specialist who resigned after the bank reported €1.2 billion in impairments due to subprime exposure in the first quarter of the year.

The structured credit division saw a spate of resignations last year, after the revelation of a €250 million rogue trading loss in September cast doubt on its risk management practices. The new plan also involves strengthening risk management, with annual additional spending of €100 million a year and "a review of risk limits, monitoring and more stringent risk controls...to allow for closer supervision of market positions."

Calyon says it will save €300 million by cutting back and streamlining its organisation, a process that will result in 250 redundancies in France and another 250 in its foreign offices by the end of the year.

See also: Another CDO head leaves Calyon
Rating agencies unmoved by Calyon's rogue trade
Senior duo leaves Calyon after €250 million rogue trade