France's largest bank today froze three investment funds threatened by the subprime mortagage collapse, claiming it can’t “fairly” place a value on their rapidly declining assets. Citing the “complete evaporation of liquidity” in the US securities market, BNP Paribas halted withdrawals from the funds, which were worth $2.2 billion, down 20% in less than 2 weeks, Bloomberg reports.
“For some of the securities there are just no prices,” said a BNP Paribas executive. The company’s shares fell 5.5% on the announcement, and the European stock index dropped more than 2%. As recently as last week, the bank had said its exposure to the American subprime crisis was “absolutely negligible.”