BNP Paribas shares plunge as bank reveals losses

Shares of BNP Paribas plunged Wednesday after the French bank said extreme market volatility triggered steep losses in its investment banking operations over the last two months.
In midday trading in Paris, BNP Paribas stock was down 16 percent at euro34.60 ($47.37).
The bank said that as a result of the loss it is considering cutting its corporate and investment banking staff by 5 percent, about 800 jobs out of the unit's existing work force of 16,000.
In a statement late Tuesday BNP Paribas said its investment banking division has lost euro710 million ($972 million) over the first 11 months of the year. The bank had previously said that in the first nine months of the year, the unit had recorded a pretax profit of euro879 million _ suggesting massive losses in October and November.
The bank as a whole, which also has large French and international retail banking operations as well as an asset management division, remained 'largely profitable' over the first 11 months of the year, BNP Paribas said.
The investment bank's losses included some euro350 million in exposure to the Madoff investment scandal, which the bank had already disclosed, BNP Paribas said.
Last month BNP Paribas said its investment banking division's pretax profit had plunged to euro38 million in the third quarter from euro760 million a year earlier due to the global financial crisis. Earlier this year the bank had vaunted its own performance during the market turmoil that began with last year's subprime mortgage market collapse.
Presenting its first half earnings in August, BNP Paribas Chief Executive Baudoin Prot had said the results showed BNP Paribas' strength in coping with the financial industry's 'major turbulence' compared with competitors.
BNP Paribas 'is, along with Goldman Sachs, one of only two investment banks in the world to remain profitable since the start of the crisis' last summer, Prot had said at the time.
On Tuesday the crisis finally caught up with both banks. Goldman Sachs Group Inc. reported its first quarterly loss since it went public in 1999, losing $2.29 billion during its fiscal fourth quarter.
The investment banking sector was turned on its head in September when Lehman Brothers filed for bankruptcy and Goldman and Morgan Stanley became bank holding companies. Like most banks, Goldman was hurt by the plunging value of its investments, especially at its principal trading desk.