BNP Paribas, France's largest bank, suspended three of its funds today as problems in the US sub-prime mortgage sector prevented it from calculating their value.

BNP Paribas Investment Partners said in a statement that the decision affected its Parvest Dynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia funds. Shares in BNP Paribas fell by 3.39 per cent to €82.55.

It said that the valuation of the funds would resume as soon as liquidity returned to the market and added that in the continued absence of liquidity, additional information on the envisaged measures would be communicated to investors within a month.

Bloomberg reports that the BNP Paribas funds had about €2 billion (£1.4 billion) of assets on July 27, including €700 million in US sub-prime mortgages rated AA or higher.

A spokeswoman for BNP could not immediately comment on the latest net asset value of the three funds.

"The complete evaporation of liquidity in certain market segments of the US securitisation market has made it impossible to value certain assets fairly regardless of their quality or credit rating," it said.

"In order to protect the interests and ensure the equal treatment of our investors, during these exceptional times, BNP Paribas Investment Partners has decided to temporarily suspend the calculation of the net asset value as well as subscriptions/redemptions, in strict compliance with regulations, for these funds," it added.

Sub-prime mortgages are the riskiest property loans, often extended to people who have payment difficulties or a bad credit history. Several major US companies have announced losses from exposure to these sub-prime loans, sending jitters across the financial services sector.

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