Banking on a Changing World
It seems that BNP Paribas (“la banque d’un monde qui change”) is joining the exclusive group of banks that are experiencing sad pricing problems, suffering from their own efforts at taking advantage from asset-deprived, mortgage-bootstrapped North-American workers:
“BNP Paribas added its name to a growing list of investment houses that have frozen funds exposed to asset-backed credit. […] Its explanation is becoming all too familiar – the panic over subprime mortgages has made the pricing of these, and related securities, next to impossible.” ( from “Subprime hits BNP Parisbas”, FT.com, August 9 2007)
And here is the press release:
“The complete evaporation of liquidity in certain market segments of the US securitisation market has made it impossible to value certain assets fairly regardless of their quality or credit rating. The situation is such that it is no longer possible to value fairly the underlying US ABS assets in the three above-mentioned funds. We are therefore unable to calculate a reliable net asset value (NAV) for the funds.” (from Press Release, BNP Paribas, August 9 2007).
Compare to this other one on consumer credit here:
“BNP Paribas, through its Cetelem subsidiary, acquires JetFinance International, Bulgaria’s leading consumer credit specialist, consolidating its pole position in this sector in continental Europe.” (from Press Release, BNP Paribas, August 3 2007).
Consumer credit rating (a great specialty, with the mortgages industry, to train consumers into risk) looked like good business a week ago. Now, how much do 3,000 high-risk subprime mortgages in Iowa worth, though? Difficult calculation, indeed. But apparently these bankers considered it was an “interesting” question to ask in the first place. Poor little banks, torn by calculative abdication.