Moody’s puts Natexis’ financial strength rating on review for downgrade

Credit rating agency Moody’s has placed the B- financial strength rating of Natexis Banques Populaires on review for possible downgrade, following the French bank’s confirmation late last week that it had made a significant loss at its structured equity derivatives business.

Natexis – the 75% owned wholesale banking arm of Banque Populaire Group – said it would report “significant losses” from structured equity products trading for the second half and is revaluing its short- and medium-term derivatives positions. Natexis admitted its risk management processes had failed to effectively manage its exposures. “The difficulties are exacerbated by the inability of certain valuation models to successfully manage the current extreme volatility,” the bank said in a statement on Friday. “Certain anomalies in the data fed into the models have also been detected.”

Despite this, Moody’s maintained all other ratings on Paris-based Natexis and its parent Banque Populaire Group.

Related link: Natexis hit by heavy equity derivatives losses