Dutch bank NIBC, one of JC Flowers’ portfolio investments, has become the latest casualty of credit market volatility after being hit by €137 million ($189 million) of losses on its US asset-backed securities. The losses slashed NIBC’s net profits for the first half to just €3 million.
Michael Enthoven, chairman of NIBC, said: “Severe instability in the US credit fixed income markets and continuous credit spread widening have further increased the non-recurring mark-to-market loss on our US asset backed securities investment book.”
JC Flowers originally bought NIBC in 2005. In March, the bank postponed an initial public offering because of volatile market conditions. It could now abandon its flotation preparations altogether.
However, Enthoven insisted: “All other business activities showed healthy underlying growth and we are convinced that NIBC has a sound strategy and business model which will guide us through these challenging market conditions.”
JC Flowers was founded in 2000 by former Goldman Sachs bankers Chris Flowers and John Oros to make private equity investments in the financial services sector. It completed its biggest deal yet in April when it agreed to buy Sallie Mae, the biggest US provider of student loans, for $25 billion (€18 billion), although the deal has since been disrupted by concerns about pending legislative changes.