BNP Paribas to repay state aid

[tocqueville]

Source: AFP

29 mins ago

PARIS (AFP) – French banking giant BNP Paribas on Tuesday said it will raise 4.3 billion euros (6.3 billion dollars) of new capital to repay state rescue funding from October.

The bank, which is repaying the support several months earlier than expected, said it no longer needed the state aid because the landscape for banking and profits had improved, and said the government will earn a significant return on its money.

For the first half of the year, the bank had reported a net profit of 3.2 billion euros.

BNP Paribas said it intended to free itself from October from state-provided preference shares worth 5.1 billion euros, which was allocated at the height of the banking crisis early this year.

Read more: http://news.yahoo.com/s/afp/20090929/ts_afp/francebankingcompanystructurebnp

[econoclast]

1. It's Mark to Market

Prices of "toxic" debt have moved sharply higher since March.

For instance, prices of single-A rated commercial MBS, priced just north of 20 cents on the dollar in mid March, have risen to nearly 60 cents on the dollar. If the banks use M2M accounting to reflect that increase in value of those assets, then the bank balance sheets and earnings look much improved. Hence they can pay back the money they received from governments.

Does this change people's opinions of the value of M2M?

When the M2M rules were weakened in the recent past, lots of folks were furious saying "we should make those bastards reflect the real market prices of this junk!!!"

Now that prices of that junk are up, do those folks feel the same way?

Should the banks be reflecting the current, real market prices?