August 9, 2007

BNP Paribas

BNP Paribas announces a freeze on three asset-backed-securities funds

The bank did not say its assets had defaulted. It said trading had vanished so completely that it could no longer work out what they were worth.

Three funds, and not in London

On 9 August 2007 BNP Paribas Investment Partners announced that it had temporarily suspended calculation of net asset values, subscriptions and redemptions for three funds: Parvest Dynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia.

The bank said a complete evaporation of liquidity in parts of the U.S. securitization market made it impossible to value the funds' underlying U.S. asset-backed securities fairly.

This was a French and Luxembourg fund-management action, not an event at a BNP Paribas operation in the United Kingdom. The funds were frozen rather than liquidated: the two French funds reopened on 28 August and the Luxembourg fund on 30 August.

€1.6 billion frozen, €94.8 billion supplied

The three funds held about €1.6 billion — roughly $2.2 billion — as reported on 7 August, the date from which the suspensions took effect at specified Paris and Luxembourg times.

As interbank stress intensified that same day, the European Central Bank supplied €94.8 billion overnight through a fine-tuning operation intended to pull the overnight interest rate back toward normal levels.

Contemporary reporting put roughly a third of the funds' money in subprime securities rated AA or higher; BNP later described them as only partially invested in such securities.

What 9 August was, and was not

BNP Paribas was not the first major institution to acknowledge subprime damage. HSBC, Bear Stearns, IKB and others had disclosed problems before August.

Some histories treat the day as the start of the global financial crisis; others as the point where existing subprime turmoil spread decisively into interbank funding markets. The Bank for International Settlements describes 9 August as the day turmoil reached those markets and a broader crisis emerged.

What the announcement demonstrated was narrower and stranger than a default: assets carrying high credit ratings had become impossible to price, a security able to look sound on paper while having no functioning market.

Sources

Researched 24 Aug 2026 6 sources not yet audited

How this was checked

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What the sources leave uncertain

August 9 is the date BNP Paribas publicly announced the decision. Its release stated that the suspensions were effective from August 7 at specified Paris and Luxembourg times.
Some histories use August 9 as the start of the global financial crisis, while others treat it as the point when existing subprime turmoil spread decisively into interbank funding markets.