BNP Paribas hopes to unfreeze funds that started stock market panic

14th August 2007, Comments 0 comments

PARIS, Aug 13, 2007 (AFP) - French bank BNP Paribas, which sparked turmoil on global stock markets last week when it suspended three of its investment funds, said Monday the funds could be unblocked before the end of the month.

PARIS, Aug 13, 2007 (AFP) - French bank BNP Paribas, which sparked turmoil on global stock markets last week when it suspended three of its investment funds, said Monday the funds could be unblocked before the end of the month.

"The re-opening could happen in principle before the end of August," a bank spokesman told AFP.

BNP Paribas suspended the funds, which had made investments linked to risky US subprime home loans, because of difficulties in valuing them.

The funds hold asset-backed securities (ABS), highly complicated financial instruments, that are linked to home loans to "subprime" borrowers with poor credit histories in the United States.

Defaults by these borrowers have led to losses for many banks and investment funds and appetite for asset-backed securities linked to subprime loans has dried up.

This led BNP Paribas to declare a total lack of liquidity in the market for ABSs, which meant it was impossible to value the assets.

Fear that other banks had been exposed to similar problems and that this could cause a credit squeeze led to sharp falls in stock markets worldwide on Thursday.

AFP

Subject: French news

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