MercoPress. South Atlantic News Agency

Hard times for some of Europe's leading financial institutions

Some of Europe's leading banks are also facing problems as a consequence of the downfall from the US credit crisis and for having possibly breached US rules banning banks from doing business with countries on a terrorist blacklist.

France's biggest retail bank Credit Agricole made a loss in the last three months of 2007, hit by a hefty charge at its Calyon investment banking arm.

Credit Agricole reported losses of 1.3 billion US dollars in the fourth quarter, after Calyon took a 3.3 billion Euro charge on losses related to the credit crisis. The charge is worse than the bank's forecast in December of a 2.5 billion Euro loss. In England London's Daily Telegraph reported that Barclays PLC is being investigated over potential breaches of US rules banning banks from doing business with countries on a terrorist blacklist. In a note to its annual financial results published in February, the bank said it had received enquiries from the US department of Justice and the New York district attorney's office about dollar payments processed by its New York branch. Barclay's said "the potential financial effect of any resolution could be substantial", but added that it 'does not expect these matters to have a material adverse effect on the financial position of the group", although "it is not possible to estimate the effect they might have upon operating results in any particular financial period". The US has issued a blacklist of nations it believes sponsors terrorism, including Cuba, Iran and North Korea, and has banned banks from carrying out most transactions in dollars for clients from these countries, the paper said. In Paris Credit Agricole also dismissed rumors that it might bid for Societe Generale, which has been seen as a takeover target since it announced huge trading losses in January. The bank blamed a former trader, Jerome Kerviel, for placing unauthorized trades that lost the company 4.9 billion Euros. Like many other big banks, Credit Agricole has reported losses on assets backed by US mortgages. Many of those home loans were granted to borrowers with poor credit histories and are known as sub-prime mortgages. But as more and more of those homeowners are failing to meet their payments, the result is severe losses for banks owning those assets.