Open

Coming up

Don't miss

Replay


LATEST SHOWS

IN THE PAPERS

57 000 little problems

Read more

IN THE PAPERS

The Sarkozy 'threat'

Read more

BUSINESS DAILY

Budget challenge for India's new government

Read more

DEBATE

Africa's Newest Failed State: How to Stop Civil War and Famine in South Sudan? (part 2)

Read more

DEBATE

Africa's Newest Failed State: How to Stop Civil War and Famine in South Sudan?

Read more

MEDIAWATCH

Israeli strikes on Gaza as seen on social media

Read more

INSIDE THE AMERICAS

World Cup humiliation for host nation

Read more

DEBATE

Israel and the Palestinians: How to Break the Cycle of Violence?

Read more

AFRICA NEWS

Somalia : Al Shebab attack on presidential palace

Read more

  • Israel steps up airstrikes as diplomacy gets under way

    Read more

  • Argentina beat Netherlands on penalties to reach World Cup final

    Read more

  • Foiled French jihadist ‘targeted Louvre and Eiffel Tower’

    Read more

  • Obama in Texas to urge congressional action on child migrant crisis

    Read more

  • Iraq’s heritage 'in danger' from ISIS militants

    Read more

  • Froome crashes out of Tour de France

    Read more

  • South Sudan independence heroes ‘have lost their way’

    Read more

  • 100 years on, the Tour de France returns to the Western Front

    Read more

  • Dozens of blindfolded bodies found south of Baghdad

    Read more

  • Alps Murder wife had ex-husband who died on same day

    Read more

  • Both candidates say they won Indonesian presidential election

    Read more

  • Brazil players should never wear 'sacred uniform' again, press says

    Read more

  • Exiled Syrian opposition elects new president

    Read more

  • Ukraine imposes new conditions on peace talks with pro-Russia rebels

    Read more

  • Sarkozy's UMP party 'almost €80 million in debt'

    Read more

Business

BNP sees 72% drop in Q3 profit after Greek haircut deal

©

Text by News Wires

Latest update : 2011-11-03

French banking giant BNP Paribas announced on Thursday that its net profit plummeted 72% in the third quarter after it adjusted for expected losses of 60% on its Greek bonds following a eurozone deal last week for banks to take losses on Greek debt.

AP - French bank BNP Paribas said Thursday that its net profit plummeted 72 percent in the third quarter after it accounted for expected losses on its Greek bonds in line with a new European agreement that hopes to reduce Greece’s burden and stop the crisis’ march.

Under the new deal, inked just over a week ago, private holders of Greek debt agreed to take 50 percent losses on those bonds, in the hopes of helping Greece eventually dig out of its debt hole and protecting other countries from getting sucked into a similar situation.

The agreement has not yet been implemented and the Greek government’s decision this week to call a referendum on it has thrown the accord into question. Despite that uncertainty, BNP said it set aside a provision for 60 percent losses on all the Greek bonds it holds.

After that provision, BNP’s net profit was €541 million ($747 million), down from €1.9 billion in the same period last year.

The bank did not say why it factored in larger losses than agreed to, but it was presumably to calm market fears that it could weather the losses.

European banks, which hold a significant amount of debt from Greece and other wobbly countries, have seen runs on their stocks in recent months and have struggled to secure the overnight loans they use to fund their day-to-day operations. Several have had their ratings downgraded; BNP Paribas’ is under review.

In its statement, BNP underscored that it was reducing its dependence on sometimes-hard-to-secure dollar loans and that it had a comfortable capital cushion. Banks have been asked to shore up their balance sheets to weather the losses on Greek and other sovereign debt.

“The new Greek debt restructuring plan has adversely impacted this quarter’s net income, which, otherwise, is in line with the performances of previous quarters,” said CEO Baudouin Prot said. “During this very challenging quarter, BNP Paribas continued to generate profits and to maintain its solvency ratio at a high level.”

While the biggest hit came from the Greek haircut, the company’s performance has also been hurt by the worsening economy, and its revenues slumped 7.6 percent to €10 billion in the July-September period.

But without the provision, net profit would have risen 2.4 percent to nearly €2 billion. planned referendum should not be about membership of the euro, Deputy Finance Minister Pantelis Oikonomou said on NET TV, rejecting what he called an ultimatum after the leaders of Germany and France said Athens would not receive another cent in European aid until it decides whether it wants to stay in the euro zone.

“I am against holding a referendum on the euro, this would be totally inopportune,” Oikonomou said. “We have received an ultimatum, foreigners interfere into what we will vote upon in the referendum.”
 

Date created : 2011-11-03

  • EUROZONE

    World leaders, markets welcome eurozone debt deal

    Read more

  • EUROZONE

    Eurozone leaders agree to write off 50% of Greek debt

    Read more

  • EUROZONE

    Merkel calls on banks to accept losses on Greek debt

    Read more

Comments

COMMENT(S)