Thursday, August 09, 2007

BNP Paribas slips 3.2% after suspending fund valuations

Make sure you read the comments with an interesting story about the ECB providing liquidity and especially the spike in overnight lending rates for all the major banks up to 6 percent ( a 65 point jump overnight) . I can smell fear.....

Ich kann Euch empfehlen die Kommentare durchzulesen. Dort finden sich spektakuläre Infos zur ECB die anscheinend eingreifen muß sowie eine Explosion der Interbankensätze bis zu 6% ( plus 65 Baisipunkte) . Ich kann die Angst förmlich riechen....

The markets in Europe turned south after this news........Thats´s the same bank that just said one week ago that their subprime exposure is under control......The CEO was maybe right with the direct BNP exposure but this doesn´t help clients of their asset management division ... Let the run for the money begin.....

Die Märkte sind mal eben ins Minus gedreht aufgrund dieser Nachricht......Noch vor einer Woche hat sich der CEO hingestellt und darauf verwiesen das deren Subprimeverwicklung unter Kontrolle sei.....Für sein eigenes Institut mag das wohl zutreffen, die Kunden von BNP Asset Management sehen das wahrscheinlich anders.....

Shares in French banking group BNP paribas lost 3.2% early Thursday after it announced that it's suspended redemptions and the calculation of the net asset value of three of its funds due to turmoil in the credit markets.

"The complete evaporation of liquidity in certain market segments of the US securitization market has made it impossible to value certain assets fairly regardless of their quality or credit rating," the bank said

> On the other hand no mery for the investors of the funds.... They should have hear the crashing sound coming ..... :-)

> Auf der anderen Seite null Mitleid mit den "gefangenen" Fondsinvestoren....Die hätten den Sound vom einbrechenden Immobilienmarkt seit Monaten hören müssen..... :-)

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 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.

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.

> Should be no surprise when you see what was rated AAA from the rating agencies....

> Sollte keine Überraschung sein wenn man sich ansieht was alles als AAA bewertet wurde....

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Anonymous Anonymous said...

Sehr interessant.

This is the one thing that people who keep trying to call a bottom in the housing and financial markets do not seem to realize, or are too dishonest to admit: what has been made public so far is just the tip of the iceberg. And the quasi-criminals on Wall St are doing everything possible to hide asset declines in order to delay the day of reckoning.


2:42 AM  
Blogger jmf said...



This story will pop up for several quarters to come.

I find it interesting that despite the probplems in the credit markets Korea & Australia have raised rates.

UK and the ECB will follow.

The Fed stayed on hold and has not signaled a imminent rate cut.

I think lots of players are getting more and more nervous.

Under Greenspan´s watch there would have been already some efforts or at least attempts from his side.

So far Bernanke has surprised me in a positive way.

But I fear that we will see the real "Bernanke" very soon....

2:58 AM  
Anonymous Anonymous said...

Blocking investors from withdrawals "was a very good decision because it avoids huge redemptions," said Jean-Edouard Reymond, who helps manage $63 billion at Union Bancaire Gestion Institutionelle SA in Paris. "If they had had redemptions they would have been obliged to sell the securities they might have in their portfolio at very cheap market prices."



3:25 AM  
Blogger jmf said...


Just ask the first investors that wanted to get out of the Bear Stearns funds month ago...

They could have gotten much better prices

"very cheap market prices"

indeed, MARKET PRICES!!!!!

I hope he has invested millions of his personal money and billions of money under management in this segment :-)

3:41 AM  
Anonymous Anonymous said...

What's up with Commerzbank?
I've heard a Rumor last Weekend, that there is trouble with their daughter Essen Hyp.
where Smoke is, is Fire.

4:03 AM  
Blogger jmf said...

I´ve heard the rumor also.

On the other hand they were one of the first that could put up a number on their subprime exposure.

Commerzbank was today under pressure before the BNP story hit the market because of a weak earnings report

4:51 AM  
Blogger jmf said...

ECB Lends Unlimited Cash at 4% as Money Rates Surge

Aug. 9 (Bloomberg) -- The European Central Bank said it will provide unlimited funds today at 4 percent after demand for cash in the European money markets drove interest rates higher.

A reluctance to lend money after concern over U.S. subprime mortgage losses roiled credit markets pushed overnight euro rates to as high as 4.7 percent today, compared with the ECB's benchmark refinancing rate of 4 percent. The rate for borrowing dollars overnight jumped to 5.86 percent from 5.35 percent yesterday.

5:08 AM  
Blogger jmf said...

Lending Rates Rise, Overnight Dollar Libor Surges

The British Bankers Association said the overnight lending rate that banks charge each other to borrow in dollars rose to 5.86 percent today from 5.35 percent.

The so-called London interbank offered rate in dollars is the highest since the start of 2001. ....

5:10 AM  
Blogger jmf said...

Looks like Bloomberg killed the link shortly after it popped up...

Full text

Aug. 9 (Bloomberg) -- The British Bankers Association said the overnight lending rate that banks charge each other to borrow in dollars rose to 5.86 percent today from 5.35 percent.

The so-called London interbank offered rate in dollars is the highest since the start of 2001.

The benchmark borrowing rate is rising on concern banks face growing losses on investments linked to U.S. mortgages. The European Central Bank said today it is ``closely monitoring the situation and stands ready to act to assure orderly conditions in the euro money market.''

``Liquidity in the market has completely dried up as investors aren't recycling their money back because of subprime concerns,'' said Saher Bin Jung, a trader on the commercial paper desk at Commerzbank AG. ``Levels have shot up dramatically since yesterday as issuers are trying to entice investors back.''

Bank of America Corp. and UBS AG said their overnight borrowing costs rose 65 basis points to 6.00 percentage points. Royal Bank of Canada said its costs rose to 6.00 percentage points from 5.37 percentage points. Barclays also said it needs to pay 6.00 percentage points to borrow overnight in dollars, up from 5.38 percentage points yesterday.

For Bank of America, the increase in overnight borrowing costs was the biggest since the Federal Open Markets Committee raised interest rates at the end of June 2004.

BNP Paribas SA, France's biggest bank, today halted withdrawals from three investment funds because it couldn't ``fairly'' value their holdings on concern about subprime mortgage losses.

The ECB in Frankfurt said in its statement today that ``there are tensions in the euro money market notwithstanding the normal supply of aggregate euro liquidity.''

Three-month dollar Libor increased to 5.5 percent from 5.38 percent.

5:26 AM  
Blogger jmf said...


The ECB has just lent a record 130B Euros to banks at 4% to easy the liquidity crunch.

This eclipses what the bank lent a day after Sep 11 2001, when it allocated 69.3 billion euros, followed by 40.5 billion euro award the day after.

Hat tip to SiO2

5:47 AM  
Anonymous Anonymous said...

Looks like ECB been tuned to Cramer TV....

Thing about these things is why not E129,999,999,999.99bn. They have no idea about pricing or marketing!!! Of course in Japan its a bit cheaper.

6:02 AM  
Blogger jmf said...

Moin Anon,

excellent take :-)

6:04 AM  
Anonymous Anonymous said...

Its USD 130.2 Euro 94.8

6:07 AM  
Blogger jmf said...

Thanks for the hint!

Maybe we will hit the 130 b € tomorrow :-)

6:11 AM  
Anonymous Anonymous said...


6:14 AM  
Anonymous Anonymous said...

Over on CR someone posted this...

6:21 AM  
Blogger jmf said...

Excellent Link!


6:54 AM  
Blogger jmf said...

Regarding the
rumors (German)

They have reaffirmed their guidance and said that their CDO and RMBS exposure is b 1.2 €.

I pretty sure that they have included their subsidiary Essen Hyp in there

7:31 AM  
Anonymous Anonymous said...

But wait all CBs hold rates and then a one night spike in what?? I still cannot see from any reports.... triggers all CBs to provide liquidity...

Mmmm by the way this ECB paper argues that that system can be gamed a rate spike may mean there is plenty of liquidity

11:42 AM  
Anonymous Anonymous said...

Honestly a lot of these banker types are jokers whose lingua franca is in fact hyperbole.

I knew one now retired (37) who I used to let buy me drinks (3-4 btl Cristal). He would yell that he had been raped, maimed, and or killed if he did not make his bonus in first 3 mths. of year.

11:59 AM  
Anonymous Anonymous said...

The fact that money cannot be sourced at the official rate means the rates are, have been too low.

12:43 PM  
Anonymous Anonymous said...

What is a Pfandbrief???

1:59 PM  
Anonymous Anonymous said...

Euro money markets

3:16 PM  
Blogger jmf said...


what a historic day yesterday....

A Pfandbrief is a bond that is backed by a mortgage.

The mortgage that is backing the Pfandbrief has to be of the highest quality (only 60% of ltv).

The issuer has also to overcollateralize the pool of mortgages.

In the history of the German Pfandbrief (largest of the world) there has never been a default.

10:52 PM  
Blogger jmf said...


The ECB provided the market with 69 billion € after 9/11

BNP says that their funds tumbled 25% in 10 days.

Source : Handelsblatt

11:24 PM  

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