Natixis SA's bond-insurance unit, CIFG Guaranty, will be taken over by the French bank's controlling shareholders, Banque Populaire and Caisse d'Epargne.
The two firms said they will recapitalise CIFG for an estimated $1.5 billion to maintain the firm's AAA rating.
The French mutual banks said today they will provide the capital and assume full ownership of CIFG. In a purchase they said will be completed "as quickly as possible."
Subprime loss
Earlier this month, credit rating agency Fitch Ratings and Moody's Investors Service said that Natixis' CIFG Guaranty unit was among the likeliest bond insurers to "experience contraction" in its "capital cushions". Fitch affirmed its rating today.
The announcement sparked a partial rally in Natixis’s share price, which had fallen steeply because of subprime fears.
In late morning trading, Natixis shares were trading 18 per cent higher at €13.37.
However, this was still 37 per cent less than their value at the start of 2007.
November 22, 2007
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