French bank BNP Paribas SA (Euronext: BNP) is closing its Israeli branch and downgrading its operations to a representative office. The move will result in 50 layoffs.
Banking sources believe that BNP is closing the branch because of its inability to gain a substantial standing in the business credit to large companies market. This market is dominated by Citigroup Inc. (NYSE: C), HSBC Holding plc (LSE: HSBA; HKSE: 005; NYSE, Paris: HBC), and Deutsche Bank AG (DAX: DBK; NYSE: DB), which operates a representative office in Israel. BNP Israel tried to focus on credit for infrastructures, water, energy, transportation, and renewable energy, but was unable to consolidate a strong position in the market.
In addition, BNP Paribas is in severe shape because of its exposure to government bonds of Portugal, Ireland, Italy, Greece, and Spain, and it will have to raise capital to comply with capital adequacy ratios.
BNP country head Charles Reisman has headed the Israeli office since it was opened in 1995, and led the opening of the branch in 2006.
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