U.S. credit woes infecting European banks

FRANKFURT, Germany, Nov. 24 (UPI) -- Analysts say the U.S. mortgage crisis is damaging some of Europe's significant, if less well known, financial institutions.

Europe's financial community was rattled this week by reports that Swiss Re, the Zurich-based reinsurance giant, had written down $1.07 billion in the value of derivatives backed by mortgage securities, The New York Times reported Saturday.

This week, two French banks, Groupe Banque Populaire and Groupe Caisse d'Epargne, paid $1.5 billion to acquire CIFG Holdings, a Paris-based bond-insurance company, the Times reported. Before its buyout, analysts questioned whether CIFG could guarantee its deteriorating mortgages.

The news from Swiss Re and CIFG renewed fears Europe will suffer more of the credit crisis that has plagued major institutions in the United States such as Citigroup and Merrill Lynch, the Times reported.

"It has the potential, if it lasts, to influence other segments of the markets," Axel A. Weber, president of Bundesbank, the German central bank, said Friday.