A pedestrian passes a BNP Paribas bank Aug. 9 (Bloomberg) -- BNP
Paribas SA, France's biggest bank, halted withdrawals from three
investment funds because it can't ``fairly'' value their holdings, as
concern over U.S. subprime mortgage losses roils credit markets.
BNP Paribas will temporarily suspend the calculation of net asset
value for the funds, which are called Parvest Dynamic ABS, BNP Paribas
ABS Euribor and BNP Paribas ABS Eonia, the Paris- based company said
in an e-mailed statement today.
The French bank follows Union Investment Management GmbH and Frankfurt
Trust in stopping redemptions from such funds. Late payments on U.S.
subprime mortgages to borrowers with poor credit histories are at the
highest since 2002, driving down the value of bonds backed by home
loans. The BNP Paribas funds had about 2 billion euros ($2.8 billion)
of assets on July 27, including 700 million euros in U.S. subprime
mortgages rated AA or higher.
``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
Paribas said in the statement.
BNP Paribas shares fell 2.54 euros, or 3 percent, to 82.91 euros by
9:12 a.m. in Paris.
When the company reported a 20 percent increase in second- quarter net
income last week, Chief Executive Officer Baudouin Prot said the
bank's exposure to the U.S. subprime meltdown was ``absolutely
negligible.''
Losing Value
Union Investment, Germany's third-biggest mutual fund manager, stopped
redemptions from one of its funds on Aug. 3 after investors pulled
about 10 percent of the assets. Frankfurt Trust, the mutual fund
manager of Germany's BHF-Bank, stopped withdrawals from a fund after
clients removed 20 percent of their money since the end of July.
The ABS Euribor fund's assets dropped 18 percent to 850 million euros
between July 24 and Aug. 7, according to data compiled by Bloomberg.
The ABS Eonia fund's total assets dropped 7 percent to 73 million
euros over the same period.
Euribor, or the Euro interbank offered rate, is an interest rate that
measures how much the biggest banks charge to lend each other euros.
Eonia is an index that measures inflation in the countries that use
the euro.
Paribas SA, France's biggest bank, halted withdrawals from three
investment funds because it can't ``fairly'' value their holdings, as
concern over U.S. subprime mortgage losses roils credit markets.
BNP Paribas will temporarily suspend the calculation of net asset
value for the funds, which are called Parvest Dynamic ABS, BNP Paribas
ABS Euribor and BNP Paribas ABS Eonia, the Paris- based company said
in an e-mailed statement today.
The French bank follows Union Investment Management GmbH and Frankfurt
Trust in stopping redemptions from such funds. Late payments on U.S.
subprime mortgages to borrowers with poor credit histories are at the
highest since 2002, driving down the value of bonds backed by home
loans. The BNP Paribas funds had about 2 billion euros ($2.8 billion)
of assets on July 27, including 700 million euros in U.S. subprime
mortgages rated AA or higher.
``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
Paribas said in the statement.
BNP Paribas shares fell 2.54 euros, or 3 percent, to 82.91 euros by
9:12 a.m. in Paris.
When the company reported a 20 percent increase in second- quarter net
income last week, Chief Executive Officer Baudouin Prot said the
bank's exposure to the U.S. subprime meltdown was ``absolutely
negligible.''
Losing Value
Union Investment, Germany's third-biggest mutual fund manager, stopped
redemptions from one of its funds on Aug. 3 after investors pulled
about 10 percent of the assets. Frankfurt Trust, the mutual fund
manager of Germany's BHF-Bank, stopped withdrawals from a fund after
clients removed 20 percent of their money since the end of July.
The ABS Euribor fund's assets dropped 18 percent to 850 million euros
between July 24 and Aug. 7, according to data compiled by Bloomberg.
The ABS Eonia fund's total assets dropped 7 percent to 73 million
euros over the same period.
Euribor, or the Euro interbank offered rate, is an interest rate that
measures how much the biggest banks charge to lend each other euros.
Eonia is an index that measures inflation in the countries that use
the euro.
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