BNP Paribas’s fund suspension in August 2007 helped trigger the 2007–2008 global financial crisis.
On August 9, 2007, BNP Paribas suspended withdrawals and calculations of asset values for three investment funds exposed to U.S. subprime mortgage markets. The bank said it could not reliably value the funds’ holdings because liquidity had disappeared from important parts of the market.
The announcement alarmed investors and contributed to a freezing of interbank lending. Central banks responded with large liquidity operations, but the underlying mortgage and credit problems continued to spread. The episode is widely treated as an early public turning point in the global financial crisis, which later intensified with major failures and rescues in 2008.
BNP Paribas did not itself fail. The key event was the suspension of three funds, not a bankruptcy of the bank. The bank’s action is also sometimes confused with the collapse of BNP Paribas’s later crisis-era competitors, including Bear Stearns and Lehman Brothers.