Fear & the Exclusively European Securities

Funds run by French insurer AXA -( news - people )
And German bank IKBDF - (news - people )
Have also been hit by the subprime crisis, investor fears are spreading even to funds with NO EXPOSURE AT ALL TO U.S. ASSETS!
Source: Forbes:No Subprime Shelter For Europe
French Rendition of the NYSE Market (haha)
-Today's: Frozen French Fund Puts Pressure On Fed
On Monday, German private bank Sal. Oppenheim froze a fund that it managed for Austria's Hypo KAG, again citing liquidity issues. But unlike BNP's funds, here...
The securities were exclusively European...
"This fund was not invested in U.S. subprime, it didn't have any U.S. exposure," said Markus Bohn, a representative of Sal. Oppenheim. He said it solely invested in European asset-backed securities, with an average rating of A, a middling investment grade.

"I haven't seen any of this before, and I've been here for eight years," said Bohn. "We've never had that problem for a European investment fund."
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From the Economist:
"The catalysts for the latest sell-off were just the sort of “Frankenstein-finance” vehicles that have come to haunt the markets lately. They are complex, are held off the banks’ balance sheets and pop up in surprising parts of the world—the most troublesome to date has been that of IKB Deutsche Industriebank, a small German lender which has required a messy bail-out by German banks.

Known as conduits, these special-purpose vehicles borrow in the short-term, commercial-paper market to make acquisitions of highly rated paper in American asset-backed securities, and have been walloped by the plunging value of those assets since the frailty of subprime loans were exposed...
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Other reading...Paris Market: Warped and Taxed

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