Tuesday, February 19, 2008


A shudder went through the French banking sector on Friday after Natixis, the country’s fourth-largest bank, announced a €1.2bn ($1.8bn) writedown, prompting fears of more losses from the US subprime market.

Natixis shares fell 10.7 per cent to close at €9.84 after the bank revealed writedowns of €817m related to the subprime mortgage market and another €380m due to exposure to US monolines, or bond insurers.

The news dragged other banking stocks down. BNP Paribas, France’s biggest bank, dropped 3.3 per cent and Crédit Agricole fell by 5 per cent. Société Générale, which this week launched a €5.5bn rights issue, fell 2.3 per cent.

Natixis, formed in 2006 and controlled by Caisses d’Epargne and Banques Populaires, was scheduled to report annual results next month. But it decided to announce estimated results for 2007 through a statement issued after market close on Thursday due to “the sharpening of the crisis”.

Net income in 2007 would fall to €1bn from €2.1bn a year earlier, it said.

Natixis said it did not plan a capital increase and that the bank’s financial structure remained solid, and that its Tier One capital ratio – the measure most used by regulators to gauge a bank’s strength – was at least 8 per cent.

However, Natixis said it would propose that shareholders take new shares instead of a cash dividend, which analysts said would imply a 2.6 per cent dilution for existing investors.

Banques Populaires and Caisses d’Epargne each hold a 34 per cent stake in the bank.

Natixis is the latest in several French banks to have been hit by the downturn in the US subprime mortgage market. Apart from SocGen, which reported the biggest loss, BNP Paribas and Crédit Agricole have also announced writedowns.

“There is a lot of bad news for financial companies at the moment, not just among French banks, which is weighing on the sector,” one analyst said.

Natixis also announced that two of the four original members of the management board, Francois Ladam and Anthony Orsatelli, were leaving and would be replaced by Jean-Marc Moriani and Jean-Pascal Beaufret.

Natixis used to own CIFG, a monoline, but it transferred the business to Caisses d’Epargne and Banques Populaires in December after credit ratings agencies warned that CIFG was at risk of losing its AAA rating.


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