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Both new hires will report to Rob Yeung, BMO’s head of global equities and financing solutions.JONATHAN HAYWARD/The Canadian Press

Bank of Montreal is looking to win a larger share of the shifting U.S. prime brokerage market by hiring two investment bankers from French bank BNP Paribas to build up its prime services business.

BMO Capital Markets has added Thomas Guagliardo as co-head of global prime finance, a division he will jointly lead with current head Jordan Lupu. Robert Luzzo is also joining the bank as head of global prime sales.

Both new hires will report to Rob Yeung, BMO’s head of global equities and financing solutions.

Some major U.S.-based, bank-owned prime brokerages have endured a year of upheaval after they were burned by the sudden collapse of Archegos Capital Management last March.

BMO spokesperson Kelly Hechler said in a statement that the bank expects that building up its prime services division “will help drive a growing presence in the U.S. equity space and capture market share.”

Mr. Guagliardo and Mr. Luzzo both worked for more than 20 years at BNP Paribas. Last month, BMO reached a deal to buy California-based Bank of the West from BNP for $20.9-billion after the European banking giant chose to retreat from U.S. retail and commercial banking. The acquisition marks an aggressive attempt by BMO to expand its U.S. business, which has already grown rapidly in recent years.

The prime brokerage business is a collection of services that investment banks offer to large clients such as hedge funds that includes securities lending and cash management. It can be lucrative but is also sometimes risky. BMO has had an established Canadian prime brokerage business for more than a decade, but its U.S. presence is comparatively small.

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BMO is bulking up in prime brokerage just as other major banks retreat, stung by billions of dollars in losses from exposure to Archegos, a failed family office that managed about US$10-billion before it became over-leveraged and rapidly imploded. The fund’s blow-up raised questions, including from banking regulators abroad, about how well some of the world’s largest banks understood the magnitude of the leverage taken on by the client to which they were lending.

Swiss bank Credit Suisse Group AG said in a recent company filing that it will cut 69 jobs in New York as it winds down its prime-services division in the city, as reported by Bloomberg News. Credit Suisse lost US$5.5-billion on its Archegos exposure.

BMO also once counted Archegos as a client in its prime brokerage division, but the Canadian bank closed out its position without any meaningful loss as Archegos unravelled last year.

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