December 19, 2018 / 8:43 AM / 7 months ago

UPDATE 1-French bank Natixis' shares slide after derivatives hit

* Books 260 mln euros hit on Asian derivatives

* Shares fall sharply (Adds more broker comment and background)

By Sudip Kar-Gupta

PARIS, Dec 19 (Reuters) - Natixis’ shares slumped on Wednesday after the French bank reported 260 million euros ($296 million) of losses and provisions on poorly performing Asian derivatives.

Natixis said that the one-off hit would result in fourth-quarter revenue dropping to 2 billion euros, from 2.25 billion euros in the same period last year.

Natixis shares were down 5.3 percent in early session trading, underperforming a 0.6 percent rise on the broader European banking index.

“Whilst the market environment has been particularly challenging in Q4, the size of the hedging losses does raise questions about risk management,” wrote JP Morgan in a note, although it kept an “overweight” rating on Natixis shares.

Investment bank Jefferies said that Natixis’ Asian derivatives losses may bode badly for French rivals such as BNP Paribas and Societe Generale, although BNP Paribas and SocGen shares were steady on Wednesday.

“There is a negative read-across for houses with large equity derivatives books in Asia, namely BNP and SG,” Jefferies said in a note to clients.

Natixis did not disclose details of the derivative operations that caused the losses but said the “model used to manage some specific products traded with clients in Asia led to a hedging strategy that proved deficient under current market conditions”.

Most stock markets in Asia performed poorly this year. The main indexes in Shanghai and Seoul are down around 20 percent this year. The losses originated mainly in South Korea, said a source close to the matter.

Natixis shares are down by around 40 percent so far in 2018.

$1 = 0.8775 euros Reporting by Sudip Kar-Gupta; Editing by Michel Rose and Louise Heavens

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