Sept. 18 (Bloomberg) -- BNP Paribas SA, France's biggest bank, said it got a ``flood'' of clients at its prime brokerage since Lehman Brothers Holdings Inc. filed for bankruptcy on Sept. 15.

BNP Paribas expanded its services for hedge funds in June, when it bought Bank of America Corp.'s prime brokerage unit. The unit provides record-keeping, securities lending and secured financing to more than 500 hedge funds and has 320 employees, the company said.

``That acquisition now looks timely in these markets as people are in the middle of a flight to quality,'' said Talbot Stark, global head of BNP Paribas hedge fund relationships, in an interview today. ``Foremost on people's minds is ensuring that wherever they decide to put assets, they will be secure.''

Lehman won't return ``billions'' of frozen prime-brokerage assets ``in the short term,'' Stephen Pearson, a partner at PricewaterhouseCoopers, administrator for the Lehman bankruptcy, said yesterday. GLG Partners Inc., the $24 billion hedge fund that started as a unit of Lehman 13 years ago, this week said some ``residual'' trades with Lehman didn't clear before it filed the biggest bankruptcy in history.

While Stark wouldn't specify how much money hedge funds have moved to BNP Paribas, he said the company is now taking only 24 hours to sign complex prime brokerage agreements that used to take as long as three months to negotiate.

BNP Paribas's five-year credit-default swaps, the costs of protecting bank bonds from defaults, are the lowest among 23 borrowers in Bloomberg's Selected Global Bank and Broker Monitor at 112 basis points. That compares with 838 basis points for Morgan Stanley and 540 basis points for Goldman Sachs, according to CMA Datavision prices. Morgan Stanley and Goldman are the biggest prime brokers, according to a Tabb Group report in May.

``Counterparty risk has become much more relevant,'' said Jerome Lussan, founder of Laven Partners LLP, a hedge fund consultant and investor in London. ``With a big commercial bank, it's less of a concern.''

To contact the reporters on this story: Tom Cahill in London at tcahill@bloomberg.net

Last Updated: September 18, 2008 10:17 EDT