Business

BNP Paribas profits steep fall on sovereign debt losses

BNP Paribas
Image caption BNP Paribas has drastically cut is exposure to EU debt

BNP Paribas, France's biggest listed bank, has revealed a 72% drop in profits after cutting its exposure to sovereign debt.

The company announced a 71.6% drop in profits to 541m euros (£466m; $746m) in the third quarter of 2011 - well below analysts' expectations of 991m euros.

BNP wrote down 60%, or 2.26bn euros, of its sovereign exposure to the crisis-hit Greek economy.

The move sent BNP Paribas shares up 7.5% by the end of trading on Thursday.

"Cautious attitude"

The bank also reduced its debt exposure to Italy - which the bank has always insisted had its debt crisis under control - by 8.3bn euros, or 40%, and to Spain by 2.2 billion euros, or 81.5%.

In the last five months, the bank has reduced its exposure to Greek, Irish and Portuguese sovereign debt by 38%. It held Greek sovereign bonds worth 1.6bn euros at 30 October, compared with 3.5bn euros at the end of June.

"BNP has taken a cautious attitude on Greek debt," said Marine Michel, a Paris-based fund manager at Montsegur Finance.

"Given the current developments, it's a bold move."