Reuters- France’s biggest listed bank, BNPParibas, froze 1.6 billion euros worth of funds on Thursday, citing U.S. subprime mortgage sector problems.
The news sent shivers through nervous financial markets. It came as Germany’s Bundesbank met to discuss a rescue package for lender IKB, which has been hit by the subprime crisis too, and as the European Central Bank said it stood ready to act if needed to ensure smooth functioning of markets.
BNP Paribas, the eurozone’s second biggest bank by market capitalisation, said the subprime crisis was preventing it from calculating the value of the asset-backed securities funds and barred investors from redeeming cash from them.
“The complete evaporation of liquidity in certain market segments of the U.S. securitisation market has made it impossible to value certain assets fairly, regardless of their quality or credit rating,” it said in a statement.
