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French Investment Bank Records First Ever Loss

Wed, 28 Jan 2009

French bank BNP Paribas has announces its first quarterly loss since the bank’s creation in 1999. The bank reported a loss of 1.4 billion Euros in the fourth quarter as a result of the volatility in the stock and bond markets . The bank’s 3 billion Euros of income wasn’t enough to offset the 400 million Euros of writedowns in a quarter which sharply contrasts to the 1.01 billion Euro profit made a year earlier.

The announcement follows plans revealed by the investment bank last month to reduce its banking unit by 5 per cent with the loss of 800 workers. Whilst the loss is far from goods news for the French bank, its share price rose by 17 per cent upon the announcement - a reflection of the relief that the loss wasn’t any larger.

A BNP Paribas statement said, ‘The fourth quarter was marked by exceptionally violent movements in the capital markets, especially in the equity markets. The investment bank had a fourth- quarter pre-tax loss of about 2 billion Euros.’

The news follows the decision of the French government last week to provide a second round of funding to France’s largest lenders . Of the 10.5 billion Euros to be injected, BNP Paribas is to receive an additional 2.55 billion Euros from the state.
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