Caisse d’Epargne and Banque Populaire, two French mutual banks, have pledged to inject $1.5bn into CIFG, a bond insurer, after it was warned by credit rating agencies it risked losing its vital AAA rating if it did not increase its capital cushion. It is the most striking subprime-related episode seen in France, which had been spared the dramas in Germany, where IKB and Sachsen LB had to be rescued earlier this year. CIFG is owned by Natixis, the French investment bank that is in turn controlled by Caisse d’Epargne and Banque Populaire. The two mutual banks announced on Thursday they would buy CIFG from Natixis and directly inject $1.5bn into the unit to maintain its crucial AAA rating. The announcement sparked a rally in Natixis’s share price, which had plunged amid subprime fears. Natixis shares closed 16% higher at €13.09, still 38% less than their value at the start of 2007.

This entry was posted by Gwen Robinson on Friday, November 23rd, 2007 at 5:55 and is filed under Capital markets. Tagged with Banque Populaire, Caisse dEpargne, CIFG, natixis. Edit this entry.