The Bankwatch

Tracking the consumer evolution of financial services

BNP fund woes take the US Sub Prime market international

In a remarkable next step in the US Sub Prime fiasco, the French Bank, BNP has taken the unheard of step, of freezing related investment funds. This means that those funds cannot be redeemed, and immediately has the effect of removing liquidity.

Paris shares down midday on profit-taking, BNP fund woes –

The funds — Parvest Dynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia — will accept no redemptions or subscriptions until further notice, BNP said.

BNP Paribas Investment Partners said the lack of liquidity means it can no longer calculate the fair value of the underlying ABS in the three funds in question, making it impossible to calculate their net asset value reliably.

Relevance to Bankwatch:
Two sets of recent events underscore the heightened risks Banks are taking to improve profits.  Speculative investment in commodity markets amongst a few Banks earlier in the year, and now the international impacts of the US Sub Prime all suggest that some Bankers are losing sight of that primary Banking mantra – ‘know your customer’.

Written by Colin Henderson

August 9, 2007 at 07:45

Posted in Uncategorized

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