The brokerage said the credit crunch could impact the quality of the French banks' loan exposures and impairments in this area could potentially be larger than the write-downs recorded against U.S. sub-prime exposures, reflecting the large size of the French banks' customer loan portfolios.
(Reuters) - Bear Stearns said French banks may need to record total collateralized debt obligation and sub-prime write-downs of 1.5 billion euros, adding that Credit Agricole <CAGR.PA> was likely to post the largest write-downs in absolute terms, while BNP Paribas <BNPP.PA> was least impacted.
The brokerage said the credit crunch could impact the quality of the French banks' loan exposures and impairments in this area could potentially be larger than the write-downs recorded against U.S. sub-prime exposures, reflecting the large size of the French banks' customer loan portfolios.
The brokerage sees write-downs for Credit Agricole across a broad range of areas, given the bank's stretched capital base.
Natixis <CNAT.PA> may experience additional writedowns in relation to its commercial mortgage-backed securities exposures and Societe Generale <SOGN.PA> may require additional write-downs in certain areas, notably unhedged CDO exposures.
!ADVERTISEMENT!The brokerage said it prefers BNP Paribas but said the French bank was not immune to negative capital market trends, adding that recent data suggested that it had taken a more conservative risk management approach than its peers.
(Reporting by Jennifer Robin Raj in Bangalore; Editing by Amitha Rajan)
