Seems my question was timely. It looks like exposure to the subprime market is now beginning to unravel itself in Europe.
The fallout of the US subprime mortgage market has hit German banks. A small German bank, IKB Deutsche Industriebank, had to be rescued Monday by its main shareholder, a government-owned bank, to the tune of €8.1 billion.
A painful session for European equity markets on Thursday began with French bank BNP Paribas revealing it was the latest casualty of the US subprime mortgage market.
BNP was forced to suspend three of its funds as recent debt market concerns had dried up liquidity.
This was accompanied by unlisted Dutch investment bank NIBC reporting first half losses due to exposure to the subprime market.
A move by the European Central Bank to inject nearly €95bn into the overnight money market only served to legitimise market fears, traders said, and the equity market sell-off intensified.
