BNP Paribas Shoots Down Report on Liquidity Troubles

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BNP Paribas categorically denied on Tuesday an Op-Ed column that quoted an anonymous executive who said the embattled French banking giant can no longer borrow in dollars due to fears about its solvency.

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The article, published by The Wall Street Journal, highlighted growing concerns in global financial markets about the ability of European lenders to absorb a serious shock, such as a potential default by Greece.

BNP Paribas categorically denies the statements made by this anonymous source and confirms that it is fully able to obtain [U.S. dollar] funding in the normal course of business, either directly or through swaps, the bank said in a statement.

The strong denial helped erase a steep selloff in shares of BNP Paribas.

The Journal, like FOX Business, is owned by Rupert Murdochs News Corp. (NWSA).

Shares of big French banks like BNP, Societe Generale and Credit Agricole have all plunged in recent weeks as the markets begin to price in the likelihood of a Greek default. Those three banks hold almost $57 billion in Greek sovereign and private debt, making them most exposed to a potential default, the Journal story said.

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Similar to the U.S. financial crisis, European banks have been the subject of numerous rumors and reports about their ability to access much-needed dollars to fund their day-to-day operations.

We can no longer borrow dollars. U.S. money-market funds are not lending to us anymore," a bank executive for BNP Paribas was quoted as saying in the Journal column. "Since we don't have access to dollars anymore, we're creating a market in euros. This is a first. . . . We hope it will work, otherwise the downward spiral will be hell. We will no longer be trusted at all and no one will lend to us anymore."

The article was written by Nicolas Lecaussin, the director of development at Frances Institute for Economic and Fiscal Research.

The bank pushed back against the story, saying it has abundant euro short-term financing and short-term dollar net funding of 60 billion euros, or $82 billion. BNP Paribas also said it has 135 billion euros of assets eligible to central banks that are unencumbered after haircuts.

BNP Paribas is surprised that the Wall Street Journal published this opinion containing both statements from an anonymous source, and a large number of unverified assertions and technical errors, without contacting the bank for verification, the company said.

After plunging earlier, shares of BNP Paribas traded 1.13% higher to 26.42 euros in European trading.

Other European banks listed in the U.S. also rallied, including Barclays (BCS), Royal Bank of Scotland (RBS) and HBC (HBC).

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