Natixis Shares Jump After $1.5 billion Injection
Shares in French bank Natixis soared 17 percent Thursday after its main shareholders announced they would inject $1.5 billion (1 billion euros) into the company's bond insurance unit.
The rating of Natixis' U.S. subsidiary CIFG, along with that of other bond insurers, was recently put under review by the Fitch rating agency, causing a sharp share price decline and worries about possible losses for the parent company.
Fitch had said it tested bond insurers that deal with collateralized debt obligations backed by subprime mortgages, and that CIFG had a "high probability" of being unable to maintain the capital and therefore keep its AAA rating.
Natixis' two main shareholders, Groupe Banque Populaire and Groupe Caisse d'Epargne, said Thursday they would provide capital support of $1.5 billion (1 billion euros) to CIFG so that the unit could maintain its AAA credit rating with the three rating agencies.
Fitch responded by confirming its triple-A rating for CIFG. The news was welcomed by investors who pushed Natixis' share price 17.4 percent higher at 13.30 euros ($19.72).
Analysts said the announcement was good news for Natixis, but that that there are still other worries for the Paris-based bank, which provides asset management, corporate and investment banking, private equity and private banking.
