Paribas Freezes Funds as Subprime Woes Keep Spreading
Paribas Freezes Funds as Subprime Woes Keep Spreading
August 9, 2007, 9:00 am
Anyone know how to say “subprime” in French?
France’s biggest listed bank, BNP Paribas, froze 1.6 billion euros ($2.2 billion) worth of funds on Thursday, citing problems in the United States subprime mortgage market. The warning, which came a week after subprime-related losses drive two Bear Stearns funds into bankruptcy protection, sent shivers through nervous financial markets.
“The complete evaporation of liquidity in certain market segments of the U.S. securitization market has made it impossible to value certain assets fairly regardless of their quality or credit rating,” BNP said. Its shares fell more than 3 percent, and stock futures in the United States moved sharply lower.
A recent spike in delinquencies among subprime borrowers — homeowners with weak credit histories — has led to broader turmoil in the credit markets. The pinch has hit private equity firms, which suddenly found themselves almost completely unable to sell debt to finance leveraged buyouts.
Wall Street has been anxiously watching to see if the crunch will ease. Investment banks, already committed to billions of dollars in financing, have kept the debt on the books in hopes of finding buyers in the fall.
Recently, though, European banks have begun struggling with subprime losses as well. Germany’s Bundesbank is meeting to discuss a rescue package for lender IKB, which has been hit by the subprime crisis, and the European Central Bank has said it is ready to act if needed to ensure smooth functioning of markets.
BNP Paribas, the eurozone’s second biggest bank by market capitalization, said the subprime crisis was preventing it from calculating the value of the asset-backed securities funds and barred investors from redeeming cash from them.
http://tinyurl.com/ypwjh8
August 9, 2007, 9:00 am
Anyone know how to say “subprime” in French?
France’s biggest listed bank, BNP Paribas, froze 1.6 billion euros ($2.2 billion) worth of funds on Thursday, citing problems in the United States subprime mortgage market. The warning, which came a week after subprime-related losses drive two Bear Stearns funds into bankruptcy protection, sent shivers through nervous financial markets.
“The complete evaporation of liquidity in certain market segments of the U.S. securitization market has made it impossible to value certain assets fairly regardless of their quality or credit rating,” BNP said. Its shares fell more than 3 percent, and stock futures in the United States moved sharply lower.
A recent spike in delinquencies among subprime borrowers — homeowners with weak credit histories — has led to broader turmoil in the credit markets. The pinch has hit private equity firms, which suddenly found themselves almost completely unable to sell debt to finance leveraged buyouts.
Wall Street has been anxiously watching to see if the crunch will ease. Investment banks, already committed to billions of dollars in financing, have kept the debt on the books in hopes of finding buyers in the fall.
Recently, though, European banks have begun struggling with subprime losses as well. Germany’s Bundesbank is meeting to discuss a rescue package for lender IKB, which has been hit by the subprime crisis, and the European Central Bank has said it is ready to act if needed to ensure smooth functioning of markets.
BNP Paribas, the eurozone’s second biggest bank by market capitalization, said the subprime crisis was preventing it from calculating the value of the asset-backed securities funds and barred investors from redeeming cash from them.
http://tinyurl.com/ypwjh8
bin66 - 10. Aug, 00:34
