Greek bond haircut hurts BNP Paribas

BNP PARIBAS took a €2.14bn (£1.8bn) hit on its Greek debt holdings in the third quarter of this year after writing down the bonds by 60 per cent, the French lender announced yesterday.

The effect of the haircut alone was enough to push revenues down to €10bn, 7.6 per cent lower than in the same quarter last year, whereas they would have risen slightly without the Greek problem.

The writedown is on the back of last week’s Eurozone deal in which it was agreed that banks would forgive 50 per cent of Greece’s debt.

The haircut was much more than the 21 per cent they agreed to in July, despite government reassurances that July’s deal was final.

As a result, BNP Paribas also moved to slash its exposure to Italian debt by some €8bn to €12bn, ignoring promises that Italy will not be allowed to default on its obligations.

Overall, the bank’s quarterly pre-tax profits plunged by 70 per cent to €948m. Aside from its sovereign exposure, its investment bank dragged the numbers down.

Revenues at the capital markets and advisory division plunged 57.5 per cent to €735m, with corporate and investment banking suffering a similar disappearance of incomings: revenues dropped 40 per cent to €1.75bn.

The bank also said that it plans to slash jobs further down the line.

Its shares closed 7.5 per cent higher.