BNP Paribas got clobbered in the second quarter as profits earned by its corporate and investment banking divisions were slashed in half. France’s biggest bank by assets saw its earnings fall 34 percent, but its write-downs and loan loss provisions remained relatively unchanged from the end of the first quarter, even though the company said it won’t need to raise capital. Witness:
The bank’s markdowns and provisions related to the subprime crisis so far amount to about 2.6 billion euros
The second quarter contribution to that total was about €450M ($694M) in write-downs and €85M ($131M) in loan loss provisions:
The investment-banking unit booked 457 million euros of writedowns on debt backed by bond insurers, as well as 85 million euros of provisions following ratings downgrades at so-called monoline insurers.
BNP Paribas is outperforming rivals Societe Generale, Credit Agricole, and UBS, but a 1/3 profit plunge is a cliff dive. It doesn’t look good with mark-downs and subprime-related trash piling up. It may be that BNP is sinking only half as fast as Societe Generale and a fraction as fast as UBS, but who wants to stand on the deck of that ship.
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