France denies plan to rescue ailing banks

City A.M. Reporter
FRANCE yesterday “categorically denied” any suggestion it was planning to recapitalise its troubled banking sector.

The Journal du Dimanche Sunday newspaper, citing government and banking sources, said the French state had considered injecting between €10bn (£8.73bn) and €15bn of public money into its banks at a secret meeting at France’s Treasury on 11 September.

Asked to comment on claims that France’s government had discussed a recapitalisation plan, Christian Noyer (pictured), head of the Bank of France, said yesterday: “There is no plan, and we don’t need one.”

However, he said French banks could use a support mechanism set up at the height of the banking crisis in 2008 to shore up the capital bases of French banks in case of an”extraordinary event”.

“They [the banks] are very solid. They have a solid capital base, comparable to other European banks and they are profitable... None of them is hiding any toxic assets.”

A sharp drop in the share prices of French banks has fuelled speculation that the French state could have to intervene and recapitalise them.

Both BNP Paribas and Société Générale have pledged to sell tens of billions of euros of assets to free up capital.

A source in Qatar said last week that BNP Paribas was in talks with the Gulf state over a possible stake sale, which the bank denied.