PARIS — BNP Paribas, the largest French lender, announced a sharp decline in third-quarter profit Thursday and said it was writing off 60 percent of the value of all the Greek debt it holds, a belated acknowledgment that the loans are largely unrecoverable.
The bank, based in Paris, said it was setting aside about €2.1 billion, or $2.9 billion, of the value of its Greek sovereign debt. It is writing down about €116 million of exposure to Greek corporate bonds.
The bank said it had also moved to address its exposure to embattled euro zone government debt in the latest quarter, selling €1.9 billion of Greek sovereign debt, €8.2 billion of Italian debt and €2.5 billion of Spanish debt.
He said during a conference call that the bank’s exposure to Greece was now small enough that a default would be manageable.
BNP Paribas said its third-quarter profit fell 72 percent from a year earlier, to €541 million. If results were adjusted to exclude the Greek write-down, the bank would have had a net profit of almost €2 billion, up more than 2 percent. Revenue, at €10.0 billion, was down 7.6 percent from a year earlier.
‘‘Over all, they’ve done a good job of demonstrating that there is enough earnings power there to take a big hit,’’ Jon Peace, a banking analyst with Nomura International in London, said.
Under a July 21 aid package between Greece and the European Union, banks had been prepared to write down the value of their Greek sovereign loans by 21 percent. But that deal, always seen in the market as insufficiently reflective of reality, was never implemented.
Many large banks went on to write down half or more of their exposure, and when a new Greek aid deal was announced on Oct. 27, its call for a 50 percent ‘‘haircut’’ on the loans merely codified what a number of banks had already put into practice.
Some French banks, including BNP Paribas and Société Générale, had come under criticism for not moving more aggressively to mark down their loans, and their stock prices suffered heavily.
Shares of BNP Paribas closed up 7.5 percent Thursday in Paris, while Société Générale’s shares were 5.8 percent higher.
Analysts said Société Générale, which is to report its own results Tuesday, would probably also announce a larger write-off on its Greek debt, but noted that the bank’s absolute exposure to the country was considerably smaller than BNP’s.
Christophe Nijdam, a banking analyst at Alphavalue in Paris, said BNP was marking down its Greek debt ‘‘because they wanted to be on the safe side. We don’t know what’s going to happen with Greece.’’
‘‘And I guess they don’t want to be criticized anymore,’’ he added.
Mr. Nijdam said European banks had ended up with the worst of all possible worlds with the Greek bailout deal of Oct. 27, because though they were under renewed pressure to write down their sovereign debt exposure, political leaders had so far not followed through with promised reinforcements to the European Financial Stability Facility, the supposed ‘‘bazooka’’ for safeguarding the euro zone.
The bank said its Tier 1 capital ratio, a measure of financial strength, rose to 11.9 percent from 11.4 percent a year earlier. Banks in the euro zone are being required to raise their ratio to 9 percent to protect against exposure to the debt of countries at risk.
Compliance with new capital rules will nonetheless come at a cost. BNP said compliance would cause gross operating income to decline by €750 million and generate an additional €1.2 billion in costs and losses.
French banks, which have pledged to shrink their balance sheets by 10 percent, have until Dec. 15 to announce their recapitalization plans. Like its peers, BNP is cutting businesses requiring dollar-based financing. It said it had cut such financing by $20 billion in the third quarter and would cut an additional $20 billion in the fourth quarter, leaving it with a remaining target of $20 billion for 2012.
‘‘The plan to reduce funding needs in dollars and the Group’s placement capacities helped it minimize the impact of the crisis that occurred in the monetary and financial markets this summer,’’ Mr. Prot said in the statement.
He told BFM radio that the bank would be announcing job cuts around Nov. 15, with reductions focused largely on the corporate and investment bank and on a global level. He did not otherwise detail the bank’s plans. Mr. Nijdam predicted the job cuts in the unit would be ‘‘in the hundreds, rather than in the thousands.’’
That business suffered in the latest quarter, BNP said, hurt by ‘‘plummeting equity markets, stepped up concerns over the sovereign debt crisis in a number of European countries, limited liquidity and extremely high volatility.’’ The unit’s revenue fell to €1.7 billion, down almost 40 percent from a year earlier.
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