First Bear Stearns, then this. Federal banks, also on an international level, increase the money supplies.
BNP Paribas Freezes Funds as Loan Losses Roil Markets (Update2)2007-08-09 05:40 (New York) (Adds analyst comment in eighth paragraph, BNP Paribas'sPapiasse in 12th, fund manager in 13th).By Sebastian Boyd Aug. 9 (Bloomberg) -- BNP Paribas SA, France's biggest bank,halted withdrawals from three investment funds because itcouldn't ``fairly'' value their holdings after concern over U.S.subprime mortgage losses roiled credit markets. The funds had about 2 billion euros ($2.76 billion) ofassets on July 27, including 700 million euros in subprime loansrated AA or higher. The Paris-based bank said today that it willstop calculating the net asset value for the funds, ParvestDynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia. The bank's announcement sent its shares down as much as 4.5percent, pulled the benchmark European stock index lower by morethan 1 percent, and helped U.S. Treasuries rally for the firsttime in four days. Bonds backed by home loans have lost value aslate loan payments by borrowers with poor credit histories roseto the highest since 2002. ``The complete evaporation of liquidity in certain marketsegments of the U.S. securitization market has made it impossibleto value certain assets fairly regardless of their quality orcredit rating,'' BNP Paribas said in the statement. The French bank joins Bear Stearns Cos. and Union InvestmentManagement GmbH in stopping fund redemptions. Dutch investmentbank NIBC Holding NV said today that it lost at least 137 millioneuros on U.S. subprime investments this year. BNP Paribas shares were down 2.56 euros, or 3 percent, to82.89 euros by 11:38 a.m. in Paris, valuing the bank at 77.6billion euros. The stock is little changed this year. Losing Value Global stock indexes gained over the past three days,lifting the MSCI World Index of shares in developed countries by3.1 percent, as concern over the subprime meltdown eased. Chief Executive Officer Baudouin Prot said the bank'sexposure to U.S. subprime was ``absolutely negligible'' when thecompany reported a 20 percent increase in second-quarter netincome last week. BNP Paribas Investment Partners oversees about356 billion euros. ``On BNP's scale this isn't too significant,'' said Benoitde Broissia, an analyst at Richelieu Finance in Paris. ``It willimpact clients. It's more of an image problem.'' The Hague-based NIBC, which is owned by a group includingJ.C. Flowers & Co., said ``severe instability'' in U.S. creditmarkets reduced the value of its U.S. asset-backed securities. Itexpects ``further mark-to-market losses,'' the company said.
Union Investment, Germany's third-biggest mutual fundmanager, stopped withdrawals from one of its funds on Aug. 3after investors pulled about 10 percent of the assets. FrankfurtTrust, the mutual fund manager of Germany's BHF-Bank, haltedredemptions from a fund after clients removed 20 percent of theirmoney since the end of July. Two hedge funds run by New York-based Bear Stearns filed forbankruptcy protection in the Cayman Islands on July 31 followingsubprime losses. The New York-based securities firm then blockedinvestors from withdrawing money from a third fund. ``For some of the securities there are just no prices,''Alain Papiasse, head of BNP Paribas's asset management andservices division, said in an interview. ``As there are noprices, we can't calculate the value of the funds.'' Blocking investors from withdrawals ``was a very gooddecision because it avoids huge redemptions,'' said Jean-EdouardReymond, who helps manage $63 billion at Union Bancaire GestionInstitutionelle SA in Paris. ``If they had had redemptions theywould have been obliged to sell the securities they might have intheir portfolio at very cheap market prices.'' Reymond doesn't hold any BNP Paribas stock, he said. The ABS Euribor fund's assets dropped 18 percent to 850million euros between July 24 and Aug. 7, according to datacompiled by Bloomberg. The ABS Eonia fund's total assets dropped7 percent to 73 million euros over the same period.--With reporting by Hortense Bioy in London. Editor: Connelly(rlh)To contact the reporter on this story:Sebastian Boyd in London at +email@example.comTo contact the editor responsible for this story:Adrian Cox at +44-20-7673-2334 or firstname.lastname@example.org