Bloomberg reports that, according to 'three people familiar with the situation', Calyon, the investment banking arm of Credit Agricole, has taken another trading hit.

The unit is thought to have suffered losses of up to $300m after European Central Bank (ECB) President Jean-Claude Trichet suggested earlier this month that the bank may have to raise interest rates in July to combat inflation. The news agency says that Trichet's remarks triggered 'a surge in the two-year European swap rate to 5.25% from 4.98% a day earlier. The jump led to the biggest inversion in Europe's yield curve since 1992, causing losses at banks that sold notes based on the spread between short and long-term debt'.

And Calyon, it appears, is not the only big loser. The Wall Street Journal reports that some market participants estimate that the collective losses sustained by investment banks and hedge funds following the unwind after Trichet's remarks may have been as high as $5bn. The newspaper quotes Kara Lemont from BNP Paribas, who said: 'Nobody ever imagined it could invert. The assumption has been that the US Fed would cut rates and the ECB would follow'.

Bloomberg quotes Peter Hahn, a research analyst at Cass Business School, who said: 'More and more, we keep seeing trading books getting badly hit. The idea that you can safely hedge just about anything, no matter how structured, is just a fallacy. It's time the banks realized this'.

The news that Calyon has possibly taken another trading hit will not go down well with Credit Agricole shareholders. Last September Calyon fired a trader who sustained $353m in losses after trades in indexes linked to credit-default swaps. The bank said at the time that these losses were the result of unauthorized trading by one employee who breached his limits.

Still, every cloud has a silver lining. It could have been far worse for Calyon. As Bloomberg reminds us, Mizuho Financial Group hired a team of Calyon bankers in December 2006 to get the bank some CDOs and mortgage-backed securities action. The mortgage-backed securities market tanked, of course, most of the bankers left less than a year later when Mizuho pulled out, and the Japanese bank found itself with a $6bn subprime lending loss.

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