FRANCE: FRANCE'S TWO biggest banks have ruled out rushing into claiming a share of the government's €40 billion capital fund, saying they were well-capitalised.
"We don't need this public facility," Frédéric Oudéa, chief executive of Société Générale said in a newspaper interview. BNP Paribas, France's biggest bank, was less categoric, saying "at present we don't have any need to raise capital", but added that it would keep its options open.
The banks' reaction followed a meeting with French president Nicolas Sarkozy in which he urged financial institutions to continue providing loans to small businesses and households. Georges Pauget, chairman of the French Banking Federation, indicated there was little the banks could do in the face of slowing demand.
Mr Pauget, who is also chief executive of Crédit Agricole, the third-largest bank, did not exclude using the state facility, saying a decision depended on its terms and conditions which have yet to be published.
Crédit Agricole later clarified his remarks. It said the bank, which earlier this year raised €5.9 billion in a rights issue, had a tier-one capital ratio - a key measure of balance sheet strength - of 8.9 per cent and "does not need to raise capital".
The banks' position could be a negotiating tactic, given their hand in lobbying the government for the package which includes a €320 billion bank loan guarantee, but it also appears that they seem reluctant to be seen wanting funds for fear of undermining confidence in their shares. - (Financial Times service)
