Shares in Natixis clawed back some of the losses made in recent weeks in reaction to the announcement by France’s fourth-largest bank that it would launch a €3.7bn ($5.9bn) rights issue.
The shares closed 11 per cent higher at €5.34 on Thursday on relief that the bank’s capital base would be put on a firmer footing after its two main shareholders, Caisse d’Epargne and Banque Populaire – which own 69.8 per cent of the investment bank – said on Wednesday they would underwrite the issue.
Analysts at Citigroup upgraded their recommendation on the stock, saying the money would “boost its capital position and cover for additional writedowns”.
Natixis will make €1.5bn of subprime-related writedowns when it announces its first-half results next month, bringing the total amount of provisions to €3.7bn.
The latest writedown was due to exposure to US monoline insurers and a portfolio of instruments including collateralised debt obligations.
Natixis said it would announce next month it had made €300m net profit, before the provisions, in the first six months of the year.
Other analysts said the rights issue ruled out risks that had weighed on the stock, including bankruptcy, uncertainty about shareholder support and losses.
Its tier one capital adequacy ratio – a measure used by regulators – would be 9 per cent after the capital-raising exercise.
The shares trade at well below the €19.55 at which they were first listed in December 2006, a month after the bank was created by its two main shareholders with the ambition of rivalling Europe’s big investment banks. But almost €10bn has been wiped off its market value since the start of the year, leaving it with a market capitalisation of €6bn.
Natixis said it would shift strategy by “sharply” reducing proprietary trading in favour of client-driven revenues. It will also reduce the share of capital allocated to its corporate and investment banking operations, while expanding asset management and retail banking.
It has also started a cost-cutting programme targeting €400m of savings by 2009.
Separately, the AMF, France’s financial regulator, has launched an inquiry into whether Natixis and other banks, including Crédit Agricole and Société Générale, disclosed information about the subprime crisis to the market which was “complete, appropriate, and reliable”, according to newspaper Les Echos.
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