BNP Paribas defends Greek debt writedown
French bank BNP Paribas and insurer CNP Assurances dismissed reports on Tuesday that they had insufficiently provisioned for their participation in the second rescue of Greece.
According to the Financial Times, the International Accounting Standards Board criticised "the inconsistent ways European banks and insurers" have been "writing down the value of their Greek sovereign debt" in a letter sent to the European Securities and Markets Authority.
While no firms were directly mentioned in the letter, the newspaper said it understood the criticism reflected worries about BNP Paribas and CNP Assurances who had calculated their Greek debt exposure at face-value and not according to market prices.
After the report, BNP Paribas defended its handling of its exposure to Greek debt as part of the second Athens debt bailout which includes private sector creditors agreeing to rollover their Greek government bond holdings.
The bank argued that it had "provisioned its exposure to Greece in full agreement with auditors and competent authorities" and according to the second rescue plan agreed in July which envisaged a 21-percent writedown for on Greek debt holdings.
On August 2, BNP Paribas announced a charge of 534 million euros ($773.6 million) which it said was calculated using a 21-percent loss adjustment on the face value of its Greek debt exposure.
Other banks had calculated their Greek debt writedown according to market value, making the operation far more expensive.
CNP Assurances said that it was "aligned with the agreement of July 21" and that their provision of 353 million euros had been approved by auditors.
© 2011 AFP