PARIS (HedgeWorld.com)–In the next couple weeks, officials are expected to finalize a deal with Zurich Financial Services to transfer a substantial portion of Zurich Capital Markets, New York, structured products business to BNP Paribas.
According to a spokeswoman, BNP Paribas’ directive was to expand activity in the United States, adding structured products linked to alternative investments. More specifically, those products are linked to funds of funds including possibly hedge funds, a spokeswoman said. The deal includes intellectual property and hiring of support staff.
Officials at Zurich, Switzerland-based Zurich Financial Services were not able to offer much more detail about the transaction but said that it was a substantial portion of Zurich Capital Market’s assets. The decision to sign a letter of intent to sell the structured product business at ZCM is in line with the overall Zurich strategy to focus on its core insurance activities and to divest this particular business line.
Late last year, ZCM started to move away from the structured finance transactions that are so dependent on ratings, according to a Zurich spokeswoman. As Zurich’s ratings were lowered, it ultimately affected the firm’s structured finance business, she added. Going forward officials are expected to focus more on asset management.
The capital markets segment of the Zurich’s business has been hard hit in the last year. According the Zurich’s annual report, the capital markets and banking segment, which includes Zurich Capital Markets, recorded a loss of US$125 million in 2002, compared with a net income of US$89 million in 2001.