SocGen chief says recap not solution

A recapitalisation of European banks is not necessary and would not solve the Eurozone crisis, according to Société Générale chief executive Frederic Oudea.

Oudea blamed a crisis of confidence for the turmoil in the 17-nation bloc, arguing that liquidity was the issue, not capital reserves.

“What is important is to deal with the Greek issue as quickly as possible and then rebuild confidence in the capacity of each bank in Europe to reduce its debt," he said in a televised interview with Reuters.

"My view is ... the potential recapitalisation will not sort out the issue of confidence in the sovereign debt."

He also said that troubled lender Dexia should not be seen as a first domino in the European banking system, its travails being the result of a specific business model.

Oudea’s comments come amid preparations for a coordinated recapitalisation of Eurozone banks that has caused friction between France and Germany over the details.

SocGen, BNP Paribas and Crédit Agricole have all announced plans to sell billions of euros in assets to boost capital.

Oudea said that Société Générale’s current plans to raise €4bn euros (£3.5bn) in asset sales would be sufficient to satisfy markets.

SocGen’s shares have lost nearly half their value in the past three months.