Issue # 1401      4 March 2009

France:

5bn euro bank bailout considered

The French government is to intervene after the country’s fourth-largest investment bank reported that its net losses had almost doubled in the last quarter of 2008.

Natixis claimed that it had been a victim of the alleged fraud scheme by Wall Street speculator Bernard Madoff and that the value of its assets had been hit by the financial crisis.

News of the losses prompted French President Nicolas Sarkozy to seek to speed up the merger plans of lenders Caisse d’Epargne and Banques Populaires, which jointly own Natixis.

The government said last week that it is ready to inject as much as €5 billion (€1 = AU$2) in cash into the group in exchange for a 20 percent stake in the bank.

Mr Sarkozy’s chief economics adviser Francois Perol is expected to take over as its new head.

Natixis posted a net loss of 1.62 billion euros in the three months to December, compared with a net loss of 900 million euros a year earlier.

For the full year, the bank posted a net loss of 2.80 billion euros compared with a net profit of 1.01 billion euros a year earlier.

Natixis has been among the French banks hardest hit by the US subprime mortgage crisis.

Chief executive officer Dominique Ferrero said that it had already restructured its corporate and investment bank and cut back on jobs.

The bank has already received 1.9 billion euros from the French government in the first tranche of its bank rescue.

Morning Star.

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