Natixis lost €260M on equity derivatives — a French bank's trading desk blew up

Natixis was the corporate and investment banking arm of BPCE, France's second-largest banking group. In early 2018, the bank announced that it had suffered a loss of approximately €260 million ($296 million) on its equity derivatives portfolio, specifically from structured products and complex equity derivative trades.

The loss occurred in Natixis's equity derivatives desk, which had built a portfolio of complex structured products that were sensitive to changes in stock market volatility. When the market experienced a sharp increase in volatility in early 2018, the positions collapsed. The loss was a significant blow to Natixis, which had already been struggling with low profitability and regulatory issues.

The bank's management had been focused on expanding its equity derivatives business, believing it had the expertise to manage the risks. The loss revealed that the bank's risk controls were not adequate for the size and complexity of the positions it was running. Natixis subsequently reduced its equity derivatives exposure and restructured the business.

The loss was part of a broader pattern of French banks losing money on equity derivatives — following Société Générale's €4.9 billion loss in 2008 and Caisse d'Epargne's €751 million loss the same year. The repeated failures suggested a systemic weakness in French banking risk management.